Should We Do A Living Trust Or A Will?
Estate planning is a crucial part of showing your family you love them. Dave explains the options.
ANSWER: There are some people in the estate-planning community who are saying the living trust is the answer to everything. The living trust puts all or the majority of your assets into a trust while you’re alive. When you die, you don’t own anything because the trust owns it. That’s a way to avoid your local and state probate tax, but it does not avoid federal estate tax.
The bad news is that a living trust is very expensive to set up and it’s very cumbersome to live in. It’s a pain to buy or sell any major assets because you have to deal with the living trust. A financial planning magazine recently said that 70% of living trusts never have the assets transferred into them. I only recommend living trusts for very wealthy people in rare circumstances who have assets they’re going to keep for the rest of their lives.
A simple will is perfect for 95% of the population. You may have an AB trust, an insurance trust, or some other trusts involved if you have net worth in excess of $1 million. But a will is really all you need.