b'Why Willing a Trust Beats Trusting a Will By Michael G. Goldstein Suelthaus & Kaplan, P .C. When Conrad Nicholson Hilton died at age 91 in 1978, his willyou are administering the trust during that period of time, it is ordained that his 28 percent stake in Hilton Hotels Corp., thenmore "heir-tight."That is, it is more difficult for any party to worth about $125 million, should go to charity, not to his children.challenge the terms of the trust at your death, based upon your But last year, after a10-year court battle, Conrad\'s son, Barron,competency.A living trust does not guarantee that heirs cannot to convinced a court that his father really intendedkeep his shares,challenge it, but it does make them less likely to succeed. now worth about $1.5 billion, in family hands.Then Barron put the company on the block.You needn\'t sacrifice flexibility either.As your own trustee, you retain full control ofare free to change the terms your assets; you Seven years ago, 87-year-old J. Seward Johnson, whoof the trust, cancel it, remove assets from it, or insert additional had inherited the Johnson&Johnsonfortune,diedand left his entire$500assets.The cost ofis somewhat higher than creating a living trust million estate to his third wife,thatof makingawill:A 46, who Basia, thenhad been hisstandard living trust can run second wife\'s chambermaid and$1,500 to $2,000, compared cook.Johnson\'s six children,11A living trustnot guarantee thatwith $600 to $800 for a will. does whomhebaddisinherited,Butthat\'sabargain contested the will.Inheirs cannot challenge it, butdoes makeconsideringthelong-term a settlement,it $169million was awardedtosavings after the living trust Johnson\'schildrenandhisthem less likely to succeed.passesto your beneficiaries. 11 favoritecharity.Basia got to k~oHowdoes_alivjngtrust-the remaining.fortune. one made outbadly, includingdirectly affect your business too thelawyers,who charged$24assets?Livingtrustshave\'million in legal fees.been used effectively in many closely held firms.The president and majority owner ofwho held one family business had siblings How can family business owners hope to rest in peace ifasubstantialinterestinthecompany,although they werenot wills can be overruled or can only be enforced through costly, acrimoniousactively involved inThe siblings wanted to keep all the shares it. legalproceedings?There\'s asurprisingly easysolution:thein the immediate family, to keep control out of the hands of inliving trust.laws.The president agreed to honor their wishes, but he wanted his wife to benefit from the income generated by his shares after For some mysterious reason, even sophisticated business ownershis death and to transfer the shares to the children after her death. are often suspicious ofofA living trust accomplished both ends.A will, on the other hand, plans involving the establishmenta trust. Some people simply are uneasy about moving around their assets.would have exposed the company to two dangers. But doing so can save lots of time and money. First, during the public probate process, competitors could have Theprimary advantage of aliving trust, which, in effect, is afound out what the business was worth. The termsaliving trust of substitute for a will, is that it avoids the need for the costly legalareprivate. process of probate.Probate, during which the court reviews the terms ofSecond, probate might have disrupted day-to-day business affairs. the will, leaves a natural opportunity for dissatisfied heirs to argue that the will does not express the true intent ofauthor.Inthis case, because the presidenta controlling interest, the itsowned Assets in a living trust can be passed directly to beneficiaries atcourt would have been responsible for maintaining the business your death, because the court has noduring the probate process, which could last anywhere from six direct involvement with those as.sets.(One thing a living trust won\'t do, however, is cut Unclemonths to several years.All decisions, including buying or selling Sam\'s estate-tax bite.)assets or equipment,mustbe approved by the court,which is likely to be extremely conservative.For example, when some Creating a living trust isorit doespartners ofof not complicatedcostly, thoughthe late ownera manufacturing firm wanted to invest require the servicesan1beisin anew facility, the court refused, saying that such investments ofattorney.paperworknot burdensome. All you have to dochange the name listed on your shares of- the very kind that had helped generate the owner\'s multimillionisthe business, stocks, bonds, bank accounts, and any other assets, todollar estate - were too risky.With a living trust, you assign a,,your name"astrustee."You don\'t need a new tax identificationsuccessor trustee (who should be familiar with your company) to .__/ number, nor must youwhenmake such business decisions. file a trust income tax returnreporting the income earned by the assets in your trust. (Reprinted withpennissionof Suelthaus&Kaplan,P.C., Because a living trust is created during your lifetime and assumingAttorneys and Counselors at Law) Page 4'