For Estate Planning, Consider Using The Living Trust
By David Dierking
As my wife and I begin to find ourselves firmly entrenched in the “middle-aged” demographic, it’s becoming more and more important for us to plan ahead. When we were younger, our later-in-life planning consisted mostly of which warm weather destination we wanted to retire to. Now, there’s so much more than that to consider. And with two young girls at home we need to make sure that they’re taken care of both physically and financially should anything ever happen to us.
When most people plan for the inevitable the first thing they think is “I need a will.” While a will is certainly a good first step, we felt that it had some shortcomings and did not address some of the important issues we wanted to concentrate on such as managing financial decisions for our children and establishing our medical preferences. That’s why we opted for a tool that we felt was more complete – the living trust.
That isn’t necessarily to say that a living trust is a better choice than a will in all scenarios. There are a number of cases where a will can indeed be the way you want to go. If you’re looking to name legal guardians for your children or designate beneficiaries of your estate, you may be able to get by with a simple will. Plus, creating a will would be much less expensive than setting up a living trust. Creating a will on your own using a software package can cost you as little as $50 whereas a living trust could easily set you back $1000 or more to have established. Having a lawyer draw a will up for you would be more expensive but would also help ensure its completeness and enforceability.
But we needed more than just a will would address for us. At a high level, we wanted to make sure that if something were to happen to us, our children would have quick access to our assets to cover their needs. The living trust would accomplish that. Trusts avoid the probate process whereas a will could be tied up in court for months if not years while all of the logistics are straightened out.
The main benefit with the living trust for us was the ability to set up successor trustees. With this feature, we have someone established who can take over for us in all matters in the event of our incapacitation. That means we have someone who can manage our financial affairs in our absence, is aware of our medical wishes if it comes to it and can handle the care of our children if we’re not around. The care of our children is our primary concern. A will would make sure that our assets got to them but the trust also helps ensure that the wishes for our children are also carried out.
Again, this is not to say that a living trust is always better than a will. As our situation grew a little more complex, the living trust made more sense as an all-inclusive option. I think the will gets a lot more publicity as the primary planning option but if you have financial, medical or lifestyle issues (or all three) you want addressed, you may find the living trust to be a better option for you too.
Photo credit: Abme89107
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