Why would you want to set up a living trust? Legacy Estate Planning attorney Steve Waltar joins Suzanne to talk about the basics and benefits of living trusts. Benefits include ease of management and they work in all 50 states.
Steve says, "I think it was Oliver Wendell Holmes who said, 'Don't put your trust in money, put your money in trust.' What's behind that? Well, lots of reasons. I think, practically speaking, it's a great way to get organized. Who knows your assets better, you or your heirs? You just get to clean up how you own things... It gets you organized, and then you can make sure that anything that's in the trust is properly organized. And then other things that are outside of the trust can point to the trust and it coordinates things. Why do people want to do a trust? Because you avoid probate, you maintain privacy, you get strong incapacity protection. It's more thorough than will planning. You have more documents. It's easier during your life. It's easier if you're incapacitated, it's easier when you die, it's harder to contest. It works in all 50 states. It's more flexible. I mean, I could go on. There tends to be a few downsides. It tends to cost more, and be a little bit more work. I don't need to sell a trust. I just need to ask what people's goals are, and many of those things cause them to want to do one."
How much more does it cost? Steve says, "If you get a Michelin tire, it's the same tire [wherever you buy it]. Powers of attorney are very different between attorneys. Wills are different. Trusts are even more different, but in general it's from $1,000 to $3,000 more, maybe, to do a trust. I mean, it's hard to know. My father in law spent $7,800 doing a will plan. That's more than a trust that I would even do for a single person today. So, in general it's a bit more, $1,000 bucks or more."
What assets should not be in a trust? Steve says, "You don't want to have retirement funds. And the reason is, you don't want to change title on retirement period. If you take your IRA or your 401K, you take it out of your name and you move it into your trust, the IRS could consider that a distribution. You may say the beneficiary is the trust, or it's my spouse, then the trust, but that's different than ownership. So you don't want to change ownership on tax-deferred assets."
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