Whether you need a living will vs. living trust as part of your estate plan depends on your overall financial situation and goals. However, it’s helpful to consider the advantages of including one or both in your planning efforts.
The trust is a very useful and flexible tool for estate planning, yet it is probably the most underused estate management technique. A trust is an artificial entity, something like a corporation, created by a document or instrument.
Everything each spouse earns during their marriage is community property. Fortunately, a gift or inheritance is separate property. However, that’s only half the battle.
Like a lot of estate planning vehicles, irrevocable trusts work very well for some purposes—particularly for tax avoidance and asset protection—and not so well for other purposes.
Done right by a lawyer, your heirs can avoid the expense and time of probating your will and may save on estate taxes, while easing the administration of your affairs while alive and after you have gone.
In situations where both spouses want the surviving spouse to inherit all the assets, which is often the case, a joint trust can be far less complicated to set up and maintain than separate trusts, with less headaches for the surviving spouse.
During this crazy 2020 tax year, in addition to being faced with all the issues surrounding Covid-19, as well as the roller coaster ride of the stock market, we are also currently in an environment where the interest rates are as low as they ever have been.
