Latest news with #livingtrust
Forbes
25-06-2025
- Business
- Forbes
Why You May Want A Living Trust—Even If You're Not A Millionaire
Bob Chitrathorn CPFA, CFO/Vice President of Wealth Planning. Author. When people hear the words 'living trust,' they often picture someone with sprawling estates, luxury cars and a multimillion-dollar portfolio. I totally get it. As a financial professional, I've lost count of how many people have told me or asked me, 'That's for rich people, right?' But here's the truth. A living trust isn't just for millionaires. It's for any person who wants to protect their loved ones, keep things simple and maintain control. A quick caveat before we continue: I am not an attorney, and this is not legal advice. This is general information that many people don't know, but should. Believe it or not, net worth doesn't play that big of a role in whether a person should have a living trust or not. But it does have a role in how much a trust can protect the family's assets. In fact, if you own a home, have kids or just want to make things easier for your family when you're gone, a living trust might be one of the smartest financial decisions you can make. What Is A Living Trust, Anyway? A living trust is a legal document that holds your assets—such as your home, bank accounts or investments—while you're alive and spells out how you want them handled after you're gone. Unlike a will, a living trust can help your family avoid probate, the costly and time-consuming legal process of distributing your estate. And here's the kicker: It works while you're still alive, too. If something happens to you—say you become incapacitated due to illness or an accident—the person you've named as trustee can step in and manage things according to your wishes, without the courts getting involved. Real Talk: It's About Peace Of Mind, Not Your Net Worth Let me tell you about James and Maria, a couple I recently worked with. They're not millionaires. They own a modest home and have two kids in high school and a small investment portfolio. But they wanted to make sure their children wouldn't be caught in a legal mess if something unexpected happened. I helped them understand the importance of a living trust. They then had a living trust set up. Their home and accounts were transferred into it, and they named a trusted family member to act as successor trustee. This would allow Maria or the successor trustee if Maria wasn't around to access the finances quickly and make critical medical decisions if anything were to happen to James, all without a court order. While the living trust itself does not allow for the medical decisions authority, the health care power of attorney or advance directive grants the power, and these are usually included in having a living trust done. Contrast that with another scenario. If a person passes away suddenly without a trust in place. It could realistically take 12 to 18 months-plus to go through probate and also thousands of dollars in court and legal fees. A person would have to try to deal with all that while also grieving. That's the difference a living trust can make. Avoiding Probate Isn't Just About The Money Let's talk about probate for a minute. If your estate has to go through probate, it becomes public record. That means anyone can see what you owned and who you left it to. That can lead to drama—and even disputes—among family members or outsiders. A living trust keeps things private. Plus, probate costs can eat up anywhere from 3% to 7% of your estate in legal fees and court costs. That's money your loved ones could use for education, housing or simply staying afloat. Flexibility Now, Protection Later One of the best things about a living trust is that it's flexible while you're alive. You can update it as your life changes—marriage, divorce, children, buying a home, launching a business. And when you're gone, your instructions are crystal clear. No confusion. No conflict. Just your legacy carried out exactly how you intended. Some Potential Downsides To Setting Up A Living Trust One of the main downsides is cost. Setting up a trust costs more than writing a will. It could cost thousands of dollars if using a local attorney. Even if it is worth it in the long run, this is definitely a barrier for some. However, some online companies can get this done for a fraction of the cost. Another thing to be aware of is that having the trust itself is not enough. You have to fund the trust, and that is not automatic. This means you have to retitle assets into the name of the trust. A trust doesn't always come with a living will, health care directives and power of attorney. You have to make sure your trust does. A trust also isn't ideal for all types of assets. Assets that have direct beneficiaries, such as IRAs, 401(k) plans and life insurance, don't need a trust as they can pass by beneficiary designations. The Bottom Line Setting up a living trust doesn't mean you're preparing for the end—it means you're planning for life. It's one of the most loving, practical gifts you can give to your family. You don't have to be wealthy to want peace of mind, privacy and protection. And the good news? You don't have to figure it out alone. You can reach out to a financial advisor who can talk with you about your options and get you in contact with an attorney. The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation. Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?
Forbes
09-06-2025
- Health
- Forbes
10 Estate Planning Tasks Everyone Must Do Before Dying
It's never fun to think about death, especially your own, but estate planning is extremely important. It's unpleasant but by planning ahead and getting your affairs in order, it makes it much easier for your loved ones to move on. The worst thing you can do is avoid it completely. Having no plan means you default to how your state handles probate, which means the judicial process makes decisions for you. Here are the ten estate planning tasks you need to perform before you die: This is the cornerstone of every estate plan. By creating a will, you ensure your assets go where you want them to. It also names guardians for any minor children you have and takes away any legal confusion because it codifies your wishes. Without a will, state laws will take over and the state will decide what happens. You do not need to hire an expensive attorney to draft a will, you can do it yourself with inexpensive online will services or download software. The most important thing is to get one done as soon as you have assets. A living trust gives you the opportunity to transfer assets to others without going through court. You can keep control of the trust while you're still alive and upon your death, the assets go to the beneficiaries. This is very useful for complex estates because it speeds up the process. Unlike a will, which you can do with software, you will want to work with an attorney to set up a trust. There may come a time when you will not be able to make decisions for yourself and that's when a power of attorney becomes important. You could be incapacitated or unable to act on your own but still need someone to make important decisions for you. This person will be able to do things on your behalf so you want to choose someone who is both trustworthy and responsible and, of course, willing to do so. Also, you can have multiple powers of attorney, which can be useful for breaking up responsibilities. This is separate from a regular power of attorney, a healthcare power of attorney is a specific role that gives them the right to make medical decisions on your behalf. You want this person to know your wishes with respect to treatment, life support, and quality of life. An ICE binder is an 'In Case of Emergency' binder that captures all of your important information in case something happens to you. This includes all the estate planning documents but could also be letter and notes to individuals that may not fit with other legal documents. The idea is that you want some documents that will explain your wishes even if they are not legally binding. It can help your loved ones navigate your life in ways that exceed that of a will. This is a more modern concern but what do you want to happen to your digital assets such as social media accounts, email, and others. These are often paid services so you'll want a plan in place or risk the default result - deletion due to nonpayment of the subscription. You'll want a list of all your accounts, perhaps as part of your ICE binder, as well as a way to access them and what you wish to happen to them. Also ask your best friend to clear your browser history! As we live longer, long term care becomes a greater concern and you'll want to plan for it. If you don't, you may be saddling your family with a very difficult decision when it comes to paying for it. Loong into long term care insurance, Medicaid planning, or putting aside a big chunk to pay for it. You can add these instructions to your estate plans or lean into insurance policies that offer it. Burial or cremation? That's a challenging question that most people don't discuss or include in their estate plan. Even if you don't have a preference, set one because it will make the lives of your loved ones so much easier. I've been to too many funerals where people said they did not know what the decedent wishes so they were forced to choose. Make sure you talk to your family about your wishes in addition to codifying them in your estate plan. The plan will establish what will happen but it's important to talk to your family about it so they understand your reasoning and thinking on various decisions you've made. You don't have to cover every nitty gritty detail but communication is very important. Finally, make sure you review and update your plans on a regular basis. Be sure to do so after any major changes but also annually just to double check everything is in order. The plan is only as good as as it is up to date.
