Living Trusts vs. Wills

[Vivianne]

Any advice on which is better and what to look out for when making this decision? Any advice is appreciated.

 

[Cheshire Figment]

It may be state specific. Living Trusts, unless you have a very large estate are designed to make lawyers richer. They are a hassle to keep up with. For example, if you go to trade in a car the old car has to be taken out of the trust and then the new car titled into the trust.

 

[staceyfe]

Any advice on which is better and what to look out for when making this decision? Any advice is appreciated.

It depends on what your circumstances are. Do you have minor children whom you wish to leave property? In Missouri, you can set up a "transfer on death" things such as real estate, cars, boats, anything with a title. Doing this avoids probate. But who you wish to leave it to can't be a minor. In our case, last year we did a "will with a testementary trust". We have to leave everything to our "estate" because we want our DS9 to be the beneficiary. Because he's a minor, we can't do a "transfer on death". It gets complicated and I don't understand it all myself. During the setup of the will, our lawyer also drew up a power of attorney and a healthcare directive.

 

[KimRaye]

It may be state specific.

HUGE factor here.

Here in Illinois, a Living Trust would be mostly for the heavily-asseted, while a Will may be just enough for the average 'Joe'. However, the average 'Joe' may have minor grandchildren, and a Living Will might better suit their needs.

And I agree, Living Trusts are a Pain! But the design is to skip probate and shift the tax burden to your ever-so-grateful heirs.

 

[imsayin]

Living Trusts, unless you have a very large estate are designed to make lawyers richer.

Actually, I think the lawyers get richer if you have a will & your estate has to go through probate. I am a huge fan of living trusts. You avoid probate and you can avoid estate taxes (married couples). It makes handling the estate easier. I do think a living trust is not necessary until your assets reach a certain value (not sure what that would be). I don't think the trust is a hassle. When setting up accounts, etc. it is like using a different name to hold your assets, not complicated, IMO.

 

[Vivianne]

Appreciate all your observations.

Hate to admit we've been dragging our feet on this one. Just wanted to contemplate on a few things before seeing a lawyer. No children or huge assets involved (probably would have spent most of the excess if I did) . Will have to look at the laws for our state. Thanks for your responses.

 

[staceyfe]

If I remember correctly, our lawyer told us setting up a living trust would not be beneficial unless our assets were around $1 million. Needless to say, a living trust was not done!!

 

[kinntj]

We have a living trust mainly because we have 2 small children. In the chance that something happened to both of us, our children's guardians would get the money immediately and not have to wait until probate to get it. The children and the huge amount of assets was the deciding factor. If my BIL goes from 2 kids to 4 kids and you need money to feed and clothe them, you don't want to have to wait through the court stuff to do it. If the kids were older, we would probably have a will instead.

It's not hard to set up a trust. We had a great lawyer (specializes in estates) that did most of the footwork for us. We just had to walk the forms into our banks and to our insurance places.

Good luck in your decision.

 

[Figment2]

Actually I am not a millionaire but I'll be doing a living trust. Why? Because I am single and if I become incapacitated it will be easier for my successor trustee to step in and handle what assets I have.

Living trusts are much cheaper in relation to estates (or guardianships for that matter) and can be handled much faster. Estates take time. The executor has to be appointed; all the assets collected, a report done to the probate court, etc. In a living trust, all the assets can be distributed by the Successor Trustee according to the trust agreement. However if the trust/estate is over 1.2 million (or is it 1.5, I forget), an estate tax return has to be filed 9 mos after death. That holds things up for awhile but usually a partial distribution can be made from the trust.

You should have a will too. The will takes care of assets held in your individual name alone (not titled in the name of the trust). (So remember when you only put 1 kid on your account and you actually have 5 kids, when you die that account actually belongs to the joint owner or kid #1. Your will will not cover that asset.)

Some might argue that a power of attorney would take care of everything if something were to happen to me. I have power of attorney for my Mom plus a couple of Aunts. I have to jump through hoops everytime. Plus I own DVC and FL does not recognize an IL power of attorney.

Just so you know - I am a trust officer in my real life.

Cyn

 

[VickiB31]

At least in Illinois...(as a previous poster wrote, every state is different)
Account is titled:
Single owner, no beneficiaries - If you are incapacitated, the banker says to your representitive, "I'm sorry, we need a court order". If you pass away, again it's "I'm sorry, you need a court order" You show me a copy of the will, amd I say, that's a very noce will. I need a court order. (Court orers almost always require an attorney, at least in Cook County)
Single Owner with beneficiary - Incapacitation - "I'm sorry - court order". If you pass away, we ask the beneficiary for a copy of the death certificate and ask how he or she would like the money.
Power of Attorney - great during the life time of the account holder, but ceases upon death.
Living trust - Incapacitation will either require that you (the grantor) resign as trustee or a doctor certify that you are incapacitated. Then the successor trustee takes over. At death, it's the same thing. Prove the death (with a death certificate) and the account is then handled by the sucessor trustee. No court orders needed

While this may not help with your decision, it may help when you know how the bank "thinks". Each person has a different need and each financial situation is unique.

Good Luck

 

[Webbie]

While you are in the mind set of setting your finanaces up for the future just in case something happens I would recommend you set up a Living Will for medical decisions at the same time.

 

[Chicago526]

My parents set up a living trust right before they retired. Don't know for sure but I assume their total assets were well over $1 million since they had enough for a nice retirement. My oldest brother will be the executor (or whatever it's called with a trust) and my parents explained that it would be much easier and cheaper for us than doing a normal will. I think they do have a will, too, to cover personal items they want to go to specific people (I'll get most of Mom's jewelry, for example, my brothers will divide up Dad's vast tool collection).

They set this up when my brothers and I were all still in our 20's, so they also stipulated that we'd only get 1/3 of our share upon their death, the next 1/3 when we were 30 and the last 1/3 when we were 35. They'd heard too many tales of young kids getting a huge inheritance only to blow it all in 5 years. We are all almost past the 35 mark (I've got 5 years to go, though!) so in a few more years, we'd get our full share should something happen to both of them (heaven forbid!).

Anyway, my understanding was that living trusts were much better than straight up wills for larger estates. Eitherway, talk to an estate lawyer to get an idea of what might work best for you.