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Why do I need a living trust if I created a Will?

April 2, 2019

One of the common estate planning misconceptions is that once a person has a will in place, there is no need for further estate planning.

While a will is an important piece of a comprehensive estate plan, there are other critical documents necessary to ensure your estate is properly managed and distributed. One of these documents is a living trust and is central to an effective estate plan.

A living trust is a legal document which controls certain assets during the contributor’s (grantor’s) lifetime. The living trust is revocable, meaning it can be changed when necessary by amending the trust, or creating an entirely new trust when warranted. The assets placed in this trust are still available for use by the grantor(s), and ensures the assets are distributed (at the grantor‘s passing) per the instructions in the trust without the use of a public court process called probate.

Avoiding probate is very desirable, especially in states like California. The probate process can be slow (it can take 1-2 years), expensive (it can cost 1-4% of the value of your estate), and is a public court proceeding (meaning a person’s assets and the disposition of those assets becomes a public record viewable by anyone). When assets are properly held within a trust, the probate process is avoided. The trust is interpreted and carried out by a designated person(s) called a trustee(s). A trust can be set up to distribute all assets at the grantor’s passing or it can have set milestones or dates, giving the flexibility to distribute assets over time. This is especially helpful when leaving assets to minors.

When creating a living trust, there are other documents that are typically created as well. These include an Advanced Healthcare Directive and Power of Attorney, amongst others. The Advanced Healthcare Directive informs your family, friends, and medical professionals about your healthcare desires, including your decision on whether to remain on life support. The Power of Attorney gives a person(s) of your choosing the ability to make decisions about your healthcare treatment when you are unable to give the directions yourself. If you have minor children, you will also want to set up a guardianship to ensure your children are raised by the friend or relative of your choosing.

Polaris Greystone Financial Group considers estate planning a vital part of our wealth management offering. While we don’t draw up the legal documents for you, we will get directly involved in the estate planning meetings with your attorney. If you don’t have a great attorney, or you are looking for a new one, we can introduce you to an estate planning attorney from our extensive network. If you do not currently have a living trust in place, or it has been several years since your trust has been reviewed, please discuss this with your PGFG Wealth Advisor at your next review.

No one likes to address their mortality. Unfortunately, none of us have an expiration date on our birth certificate. Let’s make sure that your wishes are known and carried out if something were to happen to you.

 

 

 

 

  

 

Jeremy Witbeck, CFA®, CFP®, Partner

 

 

 

 

 

Polaris Greystone Financial Group, LLC is a federally registered investment adviser. The information, statements and opinions expressed in this material are provided for general information only, are based on data we believe to be accurate at the time of writing, and are subject to change without notice. This material does not take into account your particular investment objectives, financial situation or needs, is not intended as a recommendation to purchase or sell any security, and is not intended as individual or specific advice. Investing involves risk and possible loss of principal capital. Diversification does not ensure a profit or protect against a loss. Past performance is not indicative of future returns. Advisory services are only offered to clients or prospective clients where Polaris Greystone Financial Group, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Polaris Greystone Financial Group, LLC unless a client service agreement is in place.

 

Categories: Polaris Greystone Financial Group, LLC.

Tags: Disciplined Approach, Estate Taxes, Gifting, Inheritance, Life Changes, Protecting your wealth, Transferring Assets