Genwich Life Services LLC
"Successfully guiding multi generational families through life stage planning"
Choice of a Lifetime
Who will get your money, your property,
or even your favorite pearls or pocket
watch when you're gone? That's not something most of us like to dwell on. The
evidence? Few Hispanics have the main documents used to distribute property
after death: only one in four has a will, and one in five has a living trust.
Yet deciding exactly who gets what could relieve your loved ones of a considerable
burden. After all, if you don't decide, the government will. "And that can lead to
many headaches," says Luz Herrera, a California-based estate planning attorney.
Most people consider a will the best tool to make their wishes known to relatives
and to have those wishes carried out. That may be true in many cases. But
sometimes a living trust, alone or in combination with a will, offers a better solution,
according to Herrera and other experts.
Wills are usually easier to set up and less
expensive to create and change than living
trusts. A will also lets you name a guardian
to care for minor children after your death
something that's not possible with a living
trust (unless a supplemental document is
And if you have debts, a will provides another
important benefit: creditors face a cutoff date for bringing claims against your
estate. Creditors can't seek assets from beneficiaries once ownership is
transferred to them. Should disputes involving beneficiaries and creditors arise,
the courts supervise the resolution.
For smaller estates, the setup and maintenance costs for a living trust may
outweigh any after-death savings. But Dennis Sandoval, at the American Academy
of Estate Planning Attorneys, explains that a living trust may be the more
economical route, especially for people with estates exceeding $2 million for the
2008 tax year.
Also, says Sandoval, "A will speaks for you only after you die. A living trust can
help you while you're alive." Like a will, a living trust sets out how your assets will
be managed and distributed after you die. But a trust is also created to hold and
manage your assets during your lifetime, and you can serve as the trustee and
name a successor to take over upon your death. Then if you become disabled, a
trusted advisor you've designated can take over—a feature that will save your
beneficiaries the hassle and expense of going to court to appoint a guardian or
In addition, a living trust can sometimes minimize probate at death. Whether your
estate would go into probate—the sometimes slow and costly court process that
transfers assets after death—varies by state and usually depends on the size of
Still, there are important caveats regarding living trusts. You'll most likely also need
a "pour-over" will, providing for the distribution of any property not included in the
trust. You'll also need to transfer ownership of any property you want to include in
the trust to the trust. So if you own your home, for example, you'll have to spend
the money and time to transfer the title to the trust. And as you acquire new
property, you'll need to decide whether to include it in the trust, and then update
Make It Personal
There are other caveats to keep in mind regarding both wills and living trusts.
Neither will change how property you own with another person is distributed at your
death. And neither will affect assets with a designated beneficiary, such as
individual retirement accounts or life insurance. Also, you may still need other
documents, such as those that let you name someone to make decisions for you
should you become incapacitated.
All these factors and more need to be considered when plotting your course.
That's why experts recommend that you review your situation and available options
with your legal and tax advisors. Experts agree that, in all cases, family members
bear the highest costs when their loved ones fail to make a plan.
Beware of scams!
Beware of "free lunch" estate-planning seminars and other scams that suggest
that AARP endorses living trusts. AARP doesn't sell or endorse any living trust
product. And trusts sold through these schemes often are more costly and don't
comply with state law.
By: Joe Vidueira | Source: Segunda Juventud | Date Posted: Summer 2008