Do I Need a Living Trust?

In the very simplest terms, if you own real estate or have children, you should probably have a living trust in your estate planning.

Living trusts are designed to pass your assets to loved-ones with minimal complications and expense. Even if all you own is your home, a living trust is usually recommended. In fact, it is very common that the primary asset of a trust is the family home. When it comes to any type of real estate assets, there simply is no better estate planning device than the living trust.

If you own no real estate and have less than $100,000 in assets, the cost and time invested in creating a living trust may not be worthwhile. Nevertheless, some estate planning is still essential. Keep in mind that estate planning is much more than just a living trust. It also includes the following documents that every person should have regardless of the size of their estate: 

• Springing Durable Power of Attorney for Business Affairs
  The purpose of this document is for you to name a person, usually a spouse or loved one, that you authorize to conduct your affairs should you become incapacitated or otherwise unable to handle your affairs yourself. As the title implies, the "power" granted to the person named "springs to life" only in the event of your incapacity.
   
• Advance Health Care Directive 
  Like the Power of Attorney for Business Affairs, the purpose of this document is for you to name a person, usually a spouse or loved one, that you authorize to make medical decision on your behalf should you become incapacitated or otherwise unable to make your own decisions. Again, the "power" granted to the person named "springs to life" only in the event of your incapacity. Another function of the Advance Health Care Directive is to provide your  instructions regarding the withdrawal of treatment and/or the ending of your life if you are irreversibly terminal or brain-dead.
   
• Nomination of Conservator
  If you should become incapacitated and the court appointment of a conservator is necessary, this document provides the court your wishes as to who should be appointed.
   
• Nomination of Guardian for Minor Children (where applicable)
  In situations where the appointment of a guardian for minor children become necessary, this document instructs the court who to appoint.

Before going any further, deciding whether you need a Living Trust  involves asking yourself the following questions...

1. Do you want to avoid probate?

2. Do you want to provide an easier estate transition for your family and loved ones?

3. Do you have minor children?

4. Do you wish to avoid the risk of conservatorship?

5. Do you wish to minimize estate taxes where possible?

6. Do you need to provide protection for a handicapped child or disabled relative?

7. Do you or your spouse plan to leave an inheritance to children from a prior marriage?

If you answered "yes" to any of these questions, a Living Trust may be a wise decision for you.