Last summer, my husband and I finally sat down with an estate planning attorney. Prior to that, our will, advance directive, etc. were from online templates and barely personalized. We decided it was time to do things the right way, and boy was it a learning experience.

 

To prepare us for our meeting, we were mailed a long questionnaire of which about half of the questions we didn’t even understand. How important is it to us to avoid probate? Are we looking to set up a trust? What kind? It was like jumping into an Estate Planning 201 course when we had never been to Estate Planning 101.

 

We just want our family to be taken care of in the case that one or both of us die. We want things as simple and easy as possible for whoever is left over. The attorney’s answer: a living trust.

 

Trusts Aren’t Just For Rich People

Now, when I think of trusts, I think of rich people. You know, like the young adult who jets off to Paris on the weekends to party and has never worked a day in her life because she has a trust fund. Trusts are for rich people whose kids can’t handle their millions, right?

 

Wrong. Whether or not a living trust is appropriate for you isn’t just about how much money you have. There’s a lot more to it. But first, let’s go back to Estate Planning 101. What is a living trust?

 

What Is A Living Trust?

A living trust, also called a revocable trust or inter vivos trust, is a legal document that places your assets into a trust for your benefit during your lifetime. Then, when you die, someone you appoint will give your assets to the people you want to get them.

 

Are you any less confused? I didn’t think so. A trust is basically having a third party handle something valuable for someone else. Like when my family is playing cards and the little one can’t hold all of hers. She gives them to me to hold. They are still her cards, I’m just managing them for her benefit. She puts her assets (cards) into a trust (my hands), and I (the trustee) can manage them for her, but for her benefit.

 

With a living trust, you put your assets into a trust, but you remain the trustee who manages them (while you’re alive). As if my daughter put her cards in my hands to hold, but she was the one playing them and all I did was hold them.

 

What Happens When You Die?

Now, with a living trust, you name someone to take over management and become the trustee after you die. With the card game, that would be like her telling me that when she had to go to the bathroom, her brother was going to take over the game for her. I would keep holding the cards, but he would sit in her spot and take over playing.

 

The benefit of the trust in this situation would be that she wouldn’t have to worry about trying to hand the cards over to her brother without spilling them and make it to the bathroom on time (she’s only 4, the struggle is real!). She could just jump up and run when the time came, knowing that the cards were ready and waiting in my hands for her brother to come in and start playing.

 

Why I Have A Living Trust

That’s how a living trust works and why we were recommended one. We have a house with a mortgage and two kids. If we put all of our assets into a living trust, then if something happens to us, our successor trustee can step in and take over managing our household just as we do. He will have access to all of our bank accounts, mortgage, etc. He can take over paying the mortgage and bills and will have money to feed and clothe the children and fly their grandma up to comfort them.

 

Without a living trust, our estate (everything we own) would go to probate. Probate is where the courts oversee having all of your affairs wrapped up after you die. As with all things governmental, probate can take a while, so your assets would be inaccessible for a time. In our case, we would have to hope that the person who took over guardianship of our children would have enough money to take care of them since they wouldn’t have immediate access to our money.

 

Other Benefits Of A Living Trust

Wills that go through probate are also made public, whereas assets distributed through a living trust are not made public. This doesn’t really matter to us, but some people really enjoy the privacy of a trust.

 

A living trust also makes it easier if you become capacitated and don’t die. You have a successor trustee all lined up to take over managing your affairs. Without the trust, there are legal proceedings and hoops that have to be jumped through for someone to take over your affairs.

 

Do You Need A Living Trust?

So, do you need a living trust? Don’t ask me, I’m not a lawyer! I wouldn’t dare give out legal advice because I’m not qualified to do so. But, if a living trust sounds like something that your family would benefit from, you should go talk to a real lawyer.

 

A competent estate planning attorney can look at your situation, determine whether or not you should have a trust, and help you set one up. If you’ve never spoken with an estate planning attorney, you should go find one today! (It’s really not nearly as bad as it sounds, I promise!)