Promoters of living trusts claim everyone needs a revocable living trust.[1] Yet, many websites allege that you really don’t need a trust and promote do-it-yourself alternatives. So who is right, and do you really need a living trust? The answer is: it depends. I know that isn’t the answer you were hoping for. However, you are a unique person with goals and family needs unlike anyone else! That said, the following is a checklist to help you evaluate whether you need a living trust.
1. Do you own a home with more than $100,000 in equity? (Equity is the difference between what you can sell your home for and what you owe on it.)
2. Do you own more than $75,000 in assets other than your home?
3. Do you have minor children?
4. Do you want your personal information such as what you own and who your heirs are kept private and not available to the public?
5. Are you concerned that your heirs may disagree over your property after you die?
6. Do you have children with someone other than your current spouse?
7. Do you want your heirs to receive their inheritance in less than six months?
8. Do you want to protect your property from your heirs’ creditors, bankruptcy, divorce or government aid qualifications?
9. Do you want to avoid probate if you and your spouse become incapacitated?
10. Would you prefer to save money upfront rather than pay more after you die?
If you answered yes to any of the questions above, you need a revocable living trust. Otherwise, a Will and a beneficiary deed may be all you need. Although a revocable living trust costs a little more than an attorney-prepared Will, it will save you thousands of dollars later.
Most importantly, a trust will solve the problem in the question you answered yes to above. A trust accomplishes the following:
1. Better financial protection than a Will for minor children;
2. Keeps your information private;
3. Maintains harmony in your family;
4. Prevents a step-parent or step-child from being disinherited;
5. Typically allows your heirs[2] to receive their inheritance in 60 days or less;
6. Can provide asset protection for your heirs;
7. Avoids a Guardianship and/or Conservatorship probate if you and your spouse become incapacitated; and
8. Saves a minimum of $5,000 in probate fees upon your death and a minimum of $3,000 if you become incapacitated.
In conclusion, even identical twins do not have the same family or goals. A one-size-fits-all approach will not work in estate planning.
If you would like to discuss your unique goals and family needs, or any other estate planning, probate or trust issue, please call or email W. John Skabelund at 480 344-4059 or jskabelund@davismiles.com.
[1] A revocable trust and living trust refer to the same type of trust — just like trash can and garbage can mean the same thing. Revocable simply means that the trust can be amended and changed. A living trust refers to the fact that changes to the trust must occur prior to the trust creator’s death. An irrevocable trust generally cannot be changed.
[2] An heir is called a beneficiary in a trust. However, for simplicity, I am using the term “heir” because it is more commonly known.