Ask Terry Questions Trust or Will ?

Trust or Will ?

By Terry Savage on November 12, 2013 | Financial Planning / Retirement

Hi Terry,my wife and i are in our early fifties with one son.We have a house in Illinois,which is almost paid for,and also bought a home on Kauai,Hawaii,two years ago.It is worth 100K more now then when we bought it.We both have retirement accounts,etc.My real question is should we have a will,or some type of trust for any assets,and real estate?? Right now we have neither.

Thank You-

Terry Says:  Oh, yes, you definitely need an “estate plan” — or else all your assets will be tied up in a lengthy, expensive, and very public process of probate in TWO states!  That could leave your son waiting a very long time, and unable to sell either property until the process is finished.

What you likely must do is create a revocable living trust and re-title the property in the name of the trust.  That does not have any tax impact, and is not a complicated process.  The estate planning attorney who sets up the trust, can handle that for you.  Then, assuming you and your spouse are both trustees of the trust, if one of you is incapacitated (consider a stroke or accident), the other is empowered to make financial decisions about all your property.  And if both of you should die at the same time, perhaps in an accident, your son becomes the successor trustee automatically — and can deal with the property.   Property titled in the trust does not pass through probate.

You deal with your retirement accounts differently, because each has a named beneficiary, and a successor beneficiary.  So you and your spouse should each contact your IRA and 40l(k) custodians to update the beneficiaries on each account, to become first, your spouse, and then your son as secondary beneficiary.  Or you might want to leave one or two accounts directly to your son as beneficiary.

Other savings outside a retirement plan, should be moved into accounts in the name of your new revocable living trust.  That is, instead of using joint name for savings or CDs, simply ask them to re-title the accounts in the name of your trust, so in the event of your death the property passes according to instructions inside the trust — to your son, or other relatives, or charity.  Your RLT will also contain instructions for distribution of your other “personal property” including jewelry, family heirlooms, etc.

Then you’ll need just a small, “pour-over” will to distribute any remaining assets such as your car or daily checking account, which remain outside your trust.

You need a good, professional, estate planning attorney to handle this task.   Your state has a registry of qualified attorneys in this field.  In the Chicago area, I recommend Janna Dutton, at  or 312.899.0950.



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