Home in trust, or will?
I am 71 and my wife 65 with 2 grown children. Our house is paid in full. We have a will, leaving all our investments, real estate, and monies to be divided equally between our children. Is it necessary to set up and estate plan to protect our home title and bank and investment accounts?
Terry Says
Yes, I really do not think a traditional will is adequate in this situation for a number of reasons. I always advise creation of a Revocable Living Trust — then re-titling your major assets and accounts in the name of the Trust. There is no tax consequence for making this change of title.
A RLT is useful if one of you were to have a stroke, Alzheimer’s or otherwise become incapacitated. The successor trustee you choose is automatically empowered to act on your behalf. I assume you and your spouse would be co-trustees, and then if something happened to both of you one of your children would be named as successor trustee.
If your home is in joint name with your spouse and one of you is disabled, it could cause tremendous problems if the home must be sold. You’d need a court order to declare one of the owners incompetent.
But if your ssets are named in a RLT, all these actions can be taken without probate — an expensive and time-consuming process of changing title to your assets.
One thing you do NOT want to do is make your RLT the beneficiary of retirement accounts, because naming individuals gives them a chance to stretch out withdrawals (for at least 10 years in the case of your children) of any assets in the retirement account after your death.
One more thing: You need an expert estate planning attorney to do these documents. Do NOT try those do-it-yourself online kits. You won’t be around to fix any problems when they surface!
