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Mediation & Estate Planning
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Do I need a Living Trust or a Will?

You may need both. If you have a Living Trust (this means it is revocable during your lifetime) you should also have a “pour over will” that is drafted at the same time. This will direct any property not already placed in your trust to “pour over” into your trust and be distributed by the trustee according to the directions of the trust.

Not everyone needs a revocable living trust, however. Below are some considerations when investigating your options. First determine your end objectives, THEN you can pick the options that get you there. The most important thing is to do SOMETHING to plan for your incapacity or death. This will allow your family to be present with you during your illness rather than be buried in paperwork during a time that is often full of stress and grief.

As part of any estate planning discussion, keep in mind most trust/will packages will also include naming someone to make health care decisions if you cannot, naming someone who will manage your finances if you cannot, and naming someone who will become the guardian for any minor children if you die. You can also direct what life sustaining measures you want or don’t want implemented if you are gravely injured or in a coma. The document that does this is called a “Living Will” and is a different document from a Revocable Living Trust.

Revocable Living Trust:

Advantages:

  • A living trust is a cost-saving device: in most states, it allows you to avoid the expense and delay of probate proceedings, which can take years to complete. CA attorney fees are based on the value of the assets probated. Currently this is 4% of the first $100,000 and a reduced percentage thereafter. There are also filing fees (currently $435) and other notices that would need to be paid. The executor of the will can charge the same fee as the attorney, so this can double the cost.
  • If you own property in another state, a living trust eliminates the need to probate that property in that state.
  • A living trust can immediately transfer management of your property to the trustee if you become incapacitated either physically or mentally. There is no need to go to the court to appoint a guardian or conservator.
  • A living trust protects your privacy; it remains confidential and does not become a matter of public record.
  • A living trust enables you to name someone you trust to manage trust property for young beneficiaries.
  • There is no need to hire a lawyer when the time comes to distribute your estate, although depending on the complexity of the assets, you may still want to consult with one.

Disadvantages:

  • Setting up the trust requires quite a bit of initial paperwork and can be expensive, although it depends on the complexity of your assets. Some trust packages are less than a single court filing fee and it can go up from there.
  • Setting up the trust also requires you to transfer ownership of all the property you wish to place in the trust. This may include revising title documents and recording them with the county recorder. Most attorneys will prepare these documents for you and recording fees run about $25.
  • You may run into some difficulty when you want to refinance property that is in your living trust. The mortgage company may require you to re-deed the home back to your own name, and then deed it back to the trust after the refinancing is completed.
  • Creditors do not have a final cut-off date for bringing claims against your trust.
  • You cannot designate a guardian for any minor children in a living trust (but this may be done easily in a will that supplements your trust).
  • The successor trustee, just as an executor in a will, has accounting and appraisal duties upon the death of the grantor.

Will

Advantages:

  • Setting up a will is much simpler and less expensive than setting up a living trust.
  • Creditors face a final cut-off date for bringing claims against your estate.
  • You may name a guardian for your minor children in a will.
  • You do not need to transfer any property to another entity in order to create a will or make it valid.

Disadvantages:

  • Upon probate, a will becomes a matter of public record.
  • While you may appoint whomever you wish to act as executor of your will, it is usually the probate lawyers who control that actual distribution of your property. This can be both expensive and unpleasant.
  • Probate, which is necessary for the implementation of your will, can be both costly and slow.
  • A will does not provide for the management of your assets or property if you should become physically or mentally incapacitated.