The concerns over the high costs and long delays associated with probate are often central to the discussions over why living trusts are far superior to wills as estate planning tools, even for relatively small estates.
For strictly probate avoidance purposes however, a living trust may not always be needed. Most states have a minimum asset threshold before probate becomes mandatory, and for those falling under the line, a formal probate is not usually required. For example if you live in California and your estate holds no real estate and the total value of your assets is less than $100,000 then your estate will probably not need to go through probate. This threshold is usually much lower in other states though. If this is your situation, then you should at least create a will with an attorney and consider making individual beneficiary designations for your accounts at the bank.
Most of us would agree that probate should be avoided if at all possible. This is not, however the only reason a living trust surpasses a will. In my opinion, the only true benefit of having a will is having a plan in place for the distribution of your assets at death. A better plan also has a strategy for dealing with: your incapacity, the care and support of minor children and/or grandchildren, beneficiaries with special needs, or beneficiaries with severe lack of financial acumen or maturity. Remember that a will can only go into effect after you die and cannot help you in these important areas.
Suppose you and your spouse bought a home. If you are like most of us, you need two incomes to be able to pay the mortgage. Then suppose that your spouse gets in a terrible accident that leaves him or her incapacitated. They can't work any longer, so their income stops. A will won't help you because your spouse is not dead. Your life insurance policy won't help you for the same reason. You decide you need to sell the house, but both spouses are on the title and any sale or refinance of your property will require both signatures. If your spouse is incapacitated, then you are likely to have to go to court and spend $5,000 to $10,000 to have your spouse declared legally incapacitated and have the court appoint a conservator. Then, the judge will let you know if you may or may not sell the house, and what you may or may not do with the proceeds. A properly prepared living trust will allow you to almost immediately take the actions you feel are in the best interest of you and your spouse, without interference from the courts.
Providing for your children is usually the most important goal of your estate plan. Do you have children who are minors or not yet mature enough to handle the estate you are about to leave to them? In most states if you have a will, or use the generic will that the state imposes when you don't, your children must receive their inheritance when they turn 18. With a living trust you can set a more appropriate age for them to have access to or manage your estate (e.g. age 25 or later). You can even set parameters for them to earn the right to receive or manage their inheritance.
During the "maturation" years, your trustee is empowered to provide for your children's health, education and welfare. Your trust would stipulate how and for whose benefit your assets were to be used, and would grant full legal power and authority for your trustee to carry out your wishes.
A free seminar will be offered from 1 p.m. to 2:15 p.m., Monday, June 23 at the Payson Senior Center, 514 W. Main Street, Payson. Call 1-800-350-6376 to reserve a spot or for details.