Every adult, wealthy or not, should have a valid will or a living trust in place. Yet, more than half of Americans are unprepared for the inevitable. A last will and testament is a legal document that outlines where and whom your property will pass to after death. Another option is a living trust. A trust also says how you want your assets distributed, but also helps distribute your assets faster, avoids probate, may help avoid unnecessary taxes and keeps your wishes private.
No matter the value of your estate, it’s essential to plan what will happen to your assets after death. While many avoid the subject matter, it’s the best way to take care of your loved ones financially (and save them the stress of end-of-life planning) after you’re gone.
Because these are the most important documents you’ll ever draft, it’s important to prepare yourself. In today’s blog, we’ll be taking look at why you should hire a lawyer to prepare your living trust.
(Free download: The Basics of Estate Planning)
What is a Living Trust or Revocable Trust?
A living trust, also called a revocable trust, is a document where you (the grantor or creator) transfers the ownership of property to a trust, which is managed by you as trustee for the benefit of a beneficiary.
Put simply, a living trust establishes:
- Who will handle your affairs in the case of incapacity
- Who will pay your debts and distribute assets
- Who will be designated the guardian of your minor children
- Who will receive property or assets upon your death
- Who you don’t want to receive assets
One of the key differences to remember between a will and a trust is that a trust provides planning for incapacity. Whereas, provisions in a will only go into effect upon a person’s death.
Legal vs. DIY Estate Planning
A single drafting mistake could invalidate the trust or lead to disastrous results. There are various DIY platforms and templates, but they really aren’t advised. Most of these products are unlikely to meet your needs. You wouldn’t want to run the risk of property falling into the wrong hands or l the trust being ambiguous and requiring a court’s interpretation just to save a dollar.
You’ll also need to answer questions like:
- Do I have an estate that’s taxable under state or federal law?
- Do I own significant amounts of tax-deferred retirement plans?
- Do I know how to fund a revocable trust?
- Do I have minor children?
- Do any of my beneficiaries have special needs or substance abuse issues?
- Do I need to provide for my spouse if this is a second marriage?
If your estate plan includes children from a previous marriage, disinheritances, high-dollar life insurance policies or beneficiaries with special needs, we definitely recommend steering clear from DIY solutions. Whether your estate plan is simple or complex, an experienced attorney can provide you with advice and guidance that a DIY form or program cannot provide.
4 Reasons to Hire a Lawyer to Review Your Living Trust
Estate planning varies by state.
State laws can be very particular on what may or may not be included in a living trust. Location may affect who may serve as personal representative; be a witness, where and how they need to sign the living trust. This may also change particular estate planning rules and procedures.
DIY planning programs are limited.
DIY solutions don’t support common complexities you find in living trusts like children, property that has depreciated in value or a large estate that may be subject to estate taxes. With software and templates, if you make an error, the whole trust can become invalid. Additionally, these options don’t always update according to new changes in estate planning laws.
Certain complications may affect your will.
Various circumstances can affect how you’ll draft your will and living trust. As mentioned, any mistakes can cause additional complications, expenses or make it invalid altogether. Some of these scenarios include:
- Multiple marriages
- Business ownership
- Real estate in multiple states
- Incapacity or disability needs
- Bequests to charity
- Substantial investments
You don’t see the whole picture.
We’re going to be honest, you’re not a lawyer and that’s okay. You likely don’t know which questions to ask or what your biggest problem areas might be. An attorney will also document your intent and state of mind, which is important if a dispute arises after death. An attorney will also listen to your goals and concerns and provide counsel based on your specific situation.
Enlisting the Support of a Trusted Attorney
If you’re interested in drafting a living trust, guarantee its validity with the help of an attorney. Although educating yourself is wise, you’re hardly expected to be an expert in the matter. Attempting to manage your own estate plan without legal representation can leave you in the dark if complexities arise. Plus, you’ll enjoy peace of mind knowing you’ll have ongoing support throughout the process.
If you’re ready to craft a living trust, our team can help. For more information, reach out to us today at (405) 701-6376.
Need Help With Estate Planning?
In this simple 10-step guide, we walk you through an overview of the process so you can begin outlining yours today.