One of the more common questions for estate planning attorneys is asked and addressed in an article from thebalance.com, “Will or Revocable Living Trust—Which Do You Need?” It’s a good question because many people don’t understand how important having a will is, even if you don’t have a large amount of property. The following are some factors to consider, when speaking with your estate planning attorney about wills and different types of trusts.
Mental Disability Planning. Regardless of the size of your net worth, you might want to consider a Revocable Living Trust for mental health planning. A properly drafted Revocable Living Trust, which should be prepared by an experienced Cincinnati estate planning attorney, will have provisions to determine mental capacity outside of a court proceeding. It will also state your wishes about taking care of you and your finances, in case you do become mentally incapacitated. It is likely that such a document could keep your family out of a court-supervised guardianship.
Minor Beneficiaries. This is what happens all too often: young parents have a life insurance policy or a retirement account through work. They divorce and one of the parents decides to name a minor child as a beneficiary. It is also possible that both parents could die, while the children are still minors. What happens to these assets? They are placed in a court-supervised guardianship for the benefit of the minor, until the child reaches 18. Parents can instead set up a Revocable Living Trust, naming the trust as the primary or contingent beneficiary of the life insurance or retirement account. They must then name a trustee to accept and manage the funds, instead of a court-appointed guardian. Children who are 18 years of age, are usually not ready to deal with large sums of money. With a Revocable Living Trust, the parents can dictate how old the children will be when they receive their inheritance. Some kids are ready at age 21, while others are not ready until they are 30 or ever.
Singles Need to Plan Also. If you have assets titled in your name and no legal partner, you could use a Revocable Living Trust to keep you and your assets out of a court-supervised guardianship and allow beneficiaries to avoid the cost of probate.
Planning for Second Marriages. If you and your spouse have children from prior marriages, you may have different beneficiaries. A Revocable Living Trust can ensure that each of your estate assets will be distributed where you want, outside of probate.
Don’t Forget to Fund. This last step gets forgotten all too often. If you create any kind of a trust, don’t forget to fund it and update your beneficiary designations. Otherwise, it won’t accomplish what you want.
Remember: “An ounce of prevention is worth a pound of cure.” When making your estate plan or when probating an estate or administering a trust, do not go it alone. Be sure to engage a Cincinnati estate planning attorney.
For more information about estate planning, probate or trust administration in Cincinnati (and throughout the rest of Southwest Ohio) and to review free resources regarding estate planning, probate or trust administration, visit my website. If you have questions regarding this article or a particular legal matter, feel free to contact me at 513-399-PLAN (7526).
Reference: thebalance.com (June 29, 2018) “Will or Revocable Living Trust—Which Do You Need?”