Hi, I’m Mark Powell, founder of Practical Plans. As an estate planning attorney, my answer would naturally be “absolutely.” Let me tell you – trusts aren’t magic, but they can certainly make life easier.
A well-designed estate plan, appropriate for your needs, should include three important elements: control, certainty and cost.
- Control. Let’s say I die tomorrow. With the state’s default estate plan, the first thing my family will need to do is find a lawyer to help with the court paperwork. It may take several weeks to pull together information needed to prepare the paperwork, meet with the lawyer and get him or her to gear up to help. Add a few more weeks to that to get it into the court’s calendar. That’s about three months until my family can take control of my assets. Well, that’s a long damn time!
With a legally binding living trust put in place ahead of time, the time it takes to gain control of my assets can be whittled down to four weeks. Once the paperwork is ready from the lawyer, that’s all my family will need to take control of my assets. They won’t need anything from the court.
- Certainty. When I die, there are things that I want to happen and there are people that I’d pick to handle these things for me.
If I rely on the state to decide, everything is up to the court. Without a trust in place, a judge can decide who controls my assets, who will pay my bills and who will raise my kids. That judge can also decide how my assets will get used to take care of the people I love. There’s almost no certainty for my family in that!
Now, if I give instructions and rules, the court’s job completely changes. Now the rules will say that the court should do everything in its power to carry out my instructions. That means I’m enlisting the judge as an ally – a powerful ally whose job is to make sure my instructions get carried out.
- Cost. With the state’s default rules, three people (that you probably don’t know) will get paid along the way. There are court filing fees, lawyer’s fees and executor (the person appointed by the court to carry out the judge’s orders) fees. Let’s say you left a $500,000 house to your family. The lawyer will get paid $13,000 to help with the house and the executor gets paid the same amount. That’s at least $26,000 in fees – 5 percent of your assets – do you really want your family missing out on that chunk of change?
It’s much less with a trust. Most lawyers charge by the hour or will quote a fixed fee for the project. The cost could be a couple thousand dollars for a law firm’s help administering a trust – which is much better than $13,000 just to help with one asset.
To sum it up: When you have assets or kids that need safeguarding, despite your age, consider putting an estate plan in place ahead of time so it’ll be easier for your spouse or family to control your assets in case you’re gone. You’ll reduce the hassle and put a plan in place for the future without additional headaches. Stay tuned for more advice on how to simply create a plan.