My husband and I are delinquent in visiting an attorney for estate planning purposes. We are in our mid-30s, have two children and relatively uncomplicated finances. One mortgage, multiple retirement savings accounts, no other debt. What are the advantages and disadvantages of establishing a will versus a trust? We have plenty of money to cover the expenses associated with establishing either one. What is your overall recommendation at this stage in our lives?
Terry Says: I would definitely recommend a revocable living trust — with a “pour-over” will. The major assets you own must be retitled in the name of the trust. Then your successor trustee (likely each other, and then someone else if you both die in an accident), can step right in and handle all your finances and distributions according the directions in your revocable living trust. The “pour-over” will just says anything not titled in the name of the trust (your car, your daily checking account) should be poured into the trust.
The other advantage of an RLT is that if either of you becomes incapacitated, the other can step in without getting a court order. (If for example, you needed to sell your home, if the house is titled in joint tenancy and one spouse is incapacitated, the court would have to process this request. But if the house is titled in the name of your RLT, then the successor trustee can act immediately.) There is no tax consequence for re-titling the house in the name of the trust, and your attorney will handle this for you.
But you will want advice about naming beneficiaries for your retirement plans and life insurance. That’s why you go to an estate planning specialist. Also, I’m sure he/she will recommend a healthcare power of attorney for each of you — and a living will (pull the plug) document if that is your choice. Don’t procrastinate!