A simple tool you shouldn’t go one more week without

One person with a belief is equal to ninety-nine who have only interests.

- John Stuart Mill

Last week, I preached to the choir a bit — as I was laying the foundation for why it’s so important for you to have an estate plan.

Why do I write about this regularly?

A few reasons, actually.

1. It’s important that I “make the case” from time to time, to ensure that everyone understands how critical it is to plan ahead on these issues.

2. Even those with estate plans in place need reminding of why it was such a good decision — and to update their plans!

3. People ask me these questions, all the time — really! So, it’s important that I set the record straight, so to speak.

Well, I promised that I would explain one simple tool which makes so much of our planning possible, and is often misunderstood. It’s a Living Trust. I break down this important vehicle in this week’s Note…

The Right Tools For The Right Job

A will is a simple legal document which describes what should happen to your assets upon death…and it’s, frankly, not enough for most families. That’s because the actual distribution is controlled by probate, without a plan in place. Upon your death, the will becomes a public document available for inspection by all comers. And, once your will enters the probate process, it’s no longer controlled by your family, but by the court and probate attorneys.

Oh, this can be cumbersome, time-consuming, expensive, and an emotional trauma–all added on to a family’s time of grief and vulnerability. Con artists and others have been known to use their knowledge about the contents of a will to prey on survivors. This, as you can imagine, must be avoided at all costs.

What’s great about a Living Trust, is that it actually avoids probate and keeps everything totally private–because your property is owned by the trust. That way, technically there’s nothing for the probate courts to administer! Whomever you name as your “successor trustee” gains control of your assets and distributes them exactly according to your instructions.

And one more big thing: a will doesn’t take effect until you die, and is therefore no help to you with lifetime planning. As we all start to live longer, this is an increasingly important aspect of these considerations. A Living Trust can help you preserve and increase your estate while you’re alive, and offers protection should you become disabled.

A few questions I often receive:

“Who are the trustees for my Living Trust? Can I be one?”

YES. In fact, most Living Trusts have the people who created them acting as their own trustees. If you are married, you and your spouse can act as co-trustees. And you will have absolute and complete control over all of the assets in your trust. In the event of a mentally disabling condition, your hand-picked successor trustee assumes control over your affairs, not the court’s appointee. That’s nice peace-of-mind!

“Does a Living Trust help me to avoid income taxes?”

NO. You see, the purpose of creating a Living Trust is to avoid living probate, death probate, and reduce or even eliminate federal estate taxes. It’s not a vehicle for reducing income taxes (see an accountant for that!).

In fact, if you’re the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

We manage these trusts for our clients — and we update them too! ( More on that in a  future Note, perhaps.) So, if you want to set one up (and I don’t blame you), send me an email, or give us a call: (909) 843-6427 — and we’ll get this process started for you.