In the eighth video of our Coronavirus Preparedness Series, Wes Coulson discusses the differences between wills and living trusts.
Transcript:
This is another one that has much more general application, And that is, you’ve heard me in other videos talk about the importance of avoiding probate when you die and me expressing the opinion that a living trust is the most sure fire way of getting that accomplished. I want to talk though a little bit about other things a living trust can accomplish for you that a will, just by its nature, cannot.
First of all, a living trust (if it’s properly funded) is going to keep you out of probate regardless of the size of your estate. Wills have limitations on the amount of money you can have, and they’re pretty small before you would go through probate.
Second, with wills and the probate process, you’re waiting out the claims period – The time people that people have to contest the will, so you’re waiting at least six months before money can be distributed to beneficiaries. A living trust, as long you’ve setup a reserve for claims and expenses, you can start getting money into the hands of beneficiaries right away. That’s always an advantage, but if your beneficiaries include minors, kids who are not minors but are still living at home, college kids, kids who are out of school but don’t have real jobs yet, or at least jobs that are paying like real jobs yet, or somebody who is special needs, being able to get money into their hands right away is an important thing.
A big thing that living trusts can do in various ways is protect money over time, because you have something in place to manage money over time. Again, coming back to those younger or special needs beneficiaries, or just a member of the family that is just not a good person to trust to handle their own money, and something that we do is we give every beneficiary an option through the structure of leaving their inheritance in a separate share in the trust, and as long as it stays there, it is protected against from creditor claims, and claims of an ex-spouse in a divorce proceeding.
I like to call the living trust the Swiss Army knife of estate planning, because there is just so much we can accomplish with them.
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