It is a major mistake to not have any legal instrument in place organizing what will happen to your estate if you pass. But it could be an even bigger mistake not to have a living trust. As you’ll see after reading this post, a living trust is a versatile estate planning tool that has a something to offer for everyone.
What’s Worse Than No Living Trust? Answer: No Will, Landing Your Estate in Probate
The only thing worse than not having a living trust is to not even have a will. If you don’t have a will then the state gets to decide what happens to your money, home, other real estate, bank accounts, car, and other valuables. That is because neither your family nor a court has any way of determining what your personal wishes would have been about how your estate should be divvied up. A will goes through a court-governed process called probate, and before your heirs ever see a penny, your estate must fork over court fees and higher legal fees, before your heirs see one penny. Many people mistakenly believe that by having a will you avoid probate. This is not true: if you have assets in your individual name then your assets have to go through probate whether you have a will or not.
If people think about this for even a second, they realize that they don’t want the state to make decisions about their hard-earned possessions. And you don’t have to.
You also need a Will to designate guardians to take custody of and raise your children if they are minors at the time of your deaths.
Plan Ahead, Take Control: Get a Revocable Living Trust in Place
Many people don’t know what a revocable living trust is, and they have preconceived notions that living trusts are only for rich people. This cannot be farther from the truth. A living trust can avoid many of the federal and state laws that can make probate so costly. By planning carefully WHILE YOUR ARE LIVING, and having a LIFE PLAN, you will ensure that you maximize the amount of your estate that actually gets distributed to your loved ones.
The beauty of a revocable living trust is really about control:
"REVOCABLE"
This means that you have control over your assets because you can change the terms and nature of your trust at any time while you are alive and legally competent. Once you make it, you can still change it. Say you want to change the successor trustee or beneficiary or you want to make different arrangements to dispose of your assets. You can do this; it’s possible to revoke or amend a part of it or all of it.
"LIVING"
This means the trust is created and funded during your lifetime and provides benefit to you during your lifetime. Again, this is about taking control of your estate while you are alive and having addressed all asset issues while you are living so there are clear instructions following your death or if you become disabled. Imagine if you become incapacitated. Instead of having a conservatorship, or “living probate”, which will entail a public and court intervention and possible liquidation of assets, you can simply just change the title of the trustee for your property. A great, savvy estate planning attorney can help you properly draft this.
How Badly Do I Need a Revocable Living Trust in the state where I live? Let Me Count the Ways
There are many reasons why you should consider setting up a revocable living trust. Just consider the following:
Plan Ahead, Take Control: Get a Revocable Living Trust in Place
What to do next...
If you or a loved one is thinking about how to organize your estate so that everything is in order when you pass, contact me at 425.455.3900 or go to EGatOH.com to complete our Estate Planning Quiz, Risk Analysis or online estate plan design form. They are a great place to get started.
Remember that behind every great estate plan is a knowledgeable estate planning attorney. If you want a well-crafted, accurate, customized and effective estate plan, you need the experience of an attorney who knows the nuances and ins and outs of creating a unique plan specifically for your particular situation. And don’t forget that your attorney should be dedicated to helping you MAINTAIN and update your estate plan over your lifetime with regular reviews so it will work as intended.