Day 1 of the Course: MA Living Trusts

Subject: Why trusts beat wills in Massachusetts

Good morning,

Welcome to Day 1. Grab your coffee. This takes about 12 minutes.

A Story About Weeds

Every spring I spend weeks pulling weeds from my garden. Same weeds. Same spots. Every single year.

My wife asked why I don't just spray them. "Because they'll come back," I said. "You have to pull them by the roots."

She looked at me like I was crazy. But here's the thing. Surface solutions don't fix root problems.

That's exactly what wills do in Massachusetts. They look like they solve the problem. But they don't touch the roots.

Let me show you what I mean.

What Wills Actually Do

Most people think wills avoid probate court. They don't.

Wills guarantee probate court.

That's their whole job. They tell the probate judge how to give away your stuff after the court watches everything.

Here's what happens when you die with a will in Massachusetts:
Your executor files the will with probate court. The court appoints your executor officially. This takes 4-6 weeks.

Your executor notifies creditors publicly in newspapers. Anyone you owed money can make claims. Creditors get 12 months to come forward.

The court may supervise how your assets get distributed. Everything becomes public record. Anyone can read about what you owned.

The whole process takes 12-18 months minimum. Sometimes longer if there are problems.

The Real Cost:

Probate fees in Massachusetts may run 3-5% of what you own. For a $1 million estate, that's $30,000-$50,000 in legal fees. Your family doesn't get that money.

What Living Trusts Actually Do

A living trust works completely different.

You create the trust while you're alive. You transfer your stuff into it. You stay in complete control as trustee.

• Nothing changes during your life.
• You still manage everything. You still pay taxes the same way. You still buy and sell whatever you want.

But when you die, everything changes for your family.

Your successor trustee takes over right away. No court. No judge. No public record. No waiting.

They give assets to your family following your instructions in the trust. Usually within 30-60 days.

Key Point:

Wills are instructions for probate judges. Trusts are instructions for your family. One needs court supervision. The other doesn't.

The Four Big Differences

1. Privacy

Wills become public records. Anyone can read them. Your nosy neighbor can see what you had. Your kids' ex-spouses can read everything. Scammers look for targets in probate records.

Trusts stay private. Only your trustee and family know what's inside.

2. Speed

Wills take 12-18 months through probate. Your family can't touch most assets during this time. Bills still come. Life still happens. But the money is frozen.

Trusts distribute in 30-60 days. Your family gets what they need when they need it.

3. Cost

Wills cost 3-5% of everything you own in probate fees. This comes out of what your family inherits.

Trusts cost more to create. Usually $3,000-$6,000. But they save tens of thousands in probate fees.

4. Control

Wills work okay if everyone is responsible with money. But what if your 22-year-old gets $300,000 at once? What if your son has a gambling problem?

Trusts let you control when people get money. You can spread it out over time. Protect it from divorce. Keep it away from creditors.

Understanding How Trusts Really Work

Let me explain this more clearly. A trust is like a box that holds your stuff.
You put your house in the box. Your bank accounts in the box. Your investments in the box.

While you're alive, you control the box. You can take things out. Put things in. Change what's inside. You're the trustee.

When you die, someone you picked takes over the box. This is your successor trustee. They follow your instructions about who gets what.

No court needed. No judge looking over their shoulder. Just your instructions and your trustee following them.

The Funding Mistake That Ruins 40% of Trusts

Here's where most people mess up badly.

They pay an attorney $5,000 to create a beautiful trust. Then they never put anything in it.

The house stays in their personal name. Bank accounts stay titled just to them. Investment accounts never get changed.

The trust sits empty.

When they die, their family finds out the trust is worthless. Everything goes through probate anyway. Nothing was actually in the trust.

Important Truth:

An empty trust is like a safe with nothing inside. It exists but protects nothing.

How to Fund Your Trust Correctly

Funding your trust means changing titles on everything you own. Here's what that looks like.

Your House:

You need a new deed. The deed transfers the house from your name to the trust's name. Your attorney usually prepares this. You sign it. Record it at the Registry of Deeds.

The house is now owned by the trust. But remember, you control the trust. So you still control the house.

Bank Accounts:

Go to your bank. Tell them you want to retitle accounts into your trust name. They have forms for this.

The account changes from "John Smith" to "John Smith, Trustee of the John Smith Revocable Trust."

Investment Accounts:

Call your investment company. Tell them you need to transfer accounts to your trust. They'll send forms.

Sign the forms. Return them. The account gets retitled to your trust.
You still control the investments. Still make all the decisions. Just the title changed.

Life Insurance:

This one is tricky. You have two choices.

• Choice 1: Make the trust the beneficiary of your life insurance. When you die, the money goes to the trust. The trust distributes it according to your instructions.
• Choice 2: Keep life insurance separate. Name your spouse or kids as direct beneficiaries. Life insurance already avoids probate if you have named beneficiaries.

Talk to your attorney about which works better for your situation.

Business Interests:

If you own part of a business, you need to transfer that ownership to the trust. This can be complex. Your attorney needs to review your operating agreement or partnership documents first.

Common Funding Mistakes to Avoid

Mistake 1: Doing it halfway

Don't fund just your house and forget your bank accounts. Don't transfer one investment account but leave three others. Do all of it or the trust doesn't work.

Mistake 2: Opening new accounts in your personal name

After you fund your trust, all new accounts should be in the trust name. Don't open a new savings account in your personal name. It defeats the purpose.

Mistake 3: Forgetting to retitle after refinancing

You refinance your house. The mortgage company might put the house back in your personal name temporarily. Make sure it goes back into the trust after closing.

Mistake 4: Not updating after major purchases

You buy a rental property. You inherit money from your parents. You win the lottery. Make sure these new assets go into the trust.

What Happens When You Can't Make Decisions

Here's what nobody talks about enough.

Estate planning isn't just about death. It's about what happens if you can't think clearly anymore.

What if you have a stroke? What if you get dementia? What if a car accident leaves you unconscious for months?

With just a will:

Your family needs guardianship proceedings. They go to court. They prove you can't make decisions. A judge appoints someone to manage your money and medical decisions.

This costs $15,000-$25,000. Takes months. Requires lawyers and court hearings. Your family must report to the court regularly about how they spend your money.

With a trust:

Your successor trustee takes over immediately. No court. No judge. No delay. No reporting requirements.

They manage your money according to your instructions. They pay your bills. They handle your investments. They take care of everything.

Let me tell you a real story. Names changed for privacy.

Sarah's Story vs. Linda's Story

Sarah's husband Tom had a massive stroke at 68. He survived but couldn't talk or make decisions.

They had a living trust. Sarah was the co-trustee from the day the trust was signed. The day after Tom's stroke, Sarah took over managing everything.

She paid their bills. She managed their investments. She made all the financial decisions. No court involved.

Her sister-in-law Linda wasn't as lucky.

Linda's husband Bob had the same kind of stroke. Same age. Same outcome. But they only had wills.

Linda had to go to court. She needed guardianship just to access their joint accounts. The process took 8 months and cost $22,000.

During those 8 months, bills piled up. Linda used credit cards to survive. The stress nearly broke her.

Same tragedy. Completely different outcomes. The difference was the trust.

Who Needs to Be Your Successor Trustee

Picking your successor trustee matters a lot. This person takes over when you can't manage things anymore. If you're married most people name both spouses as c0-trustees from the start.

Most married people pick their spouse first. That makes sense. Your spouse knows your finances. Knows your wishes. Will protect your interests.

But who's second? Who takes over if your spouse can't or won't serve?

Good choices for successor trustees:

Your adult children if they're responsible with money. Someone who understands your wishes. Someone who gets along with the whole family.

A brother or sister if they're good with finances. A close friend who knows you well. A professional trustee like a bank or trust company.

Bad choices for successor trustees:

Someone who can't handle conflict. Someone who plays favorites with your kids. Someone who's terrible with money. Someone who lives across the country and can't handle the work.

Pour-Over Wills: The Safety Net

Even with a trust, you still need a will. This is called a pour-over will.

Here's why. Maybe you forgot to put something in the trust. Maybe you got something new right before you died. Maybe you inherited something and died before transferring it.

The pour-over will catches these things. It says "anything I forgot goes into my trust."

This stuff still goes through probate. But at least it ends up in the trust eventually. Then it gets distributed according to your trust instructions.

Think of it like a safety net. You hope you never need it. But it's there just in case.

Revocable vs. Irrevocable Trusts

We've been talking about revocable living trusts. "Revocable" means you can change it. Cancel it. Modify it. Whatever you want.

You keep complete control. You can take your house back out. Close the whole trust down. Start over if you want.

Irrevocable trusts are different. Once you create them, you can't change them. You give up control. You can't get the assets back.

Why would anyone do that? Because irrevocable trusts offer more protection. Better asset protection from lawsuits. Better protection from estate taxes. Better protection from creditors.

But the trade-off is you lose control. For most families, revocable trusts work fine. We'll talk more about this in Day 3 when we cover taxes.

Tomorrow: Protecting Problem Beneficiaries

Today you learned why trusts beat wills. You learned the funding mistake that ruins 40% of trusts. You learned how trusts work when you can't make decisions.

Tomorrow I'll show you how trust provisions protect beneficiaries who aren't ready for large inheritances. The spendthrift child. The addict. The one going through divorce.

This is where trusts become more than probate-avoidance tools. They become protective shields.

Day 2 arrives tomorrow at 7 AM: Protecting Problem Beneficiaries

To your family's protection,

Joel Bernstein, JD, LLM (Tax)
Retired 2025 • 32 Years Protecting Massachusetts Families

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P.S. The funding mistake ruins 40% of trusts. Don't pay $5,000 for documents then leave them empty. Work with an attorney who helps you transfer assets properly.

P.P.S. Tomorrow we dive into how trust provisions protect beneficiaries who aren't ready for large inheritances.

Joel Bernstein does not provide legal or tax advice. This information is general and educational in nature and should not be considered legal or tax advice. Any tax-related information discussed on this page is based on tax laws, regulations, or other guidance that are complex and subject to change. Additional tax rules not discussed here may be applicable to your situation. We recommend that you consult a qualified tax advisor or legal advisor about your individual situation.