ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, September 23, 1996 TAG: 9609230108
SECTION: MONEY PAGE: B-6 EDITION: METRO
COLUMN: Money Matters
SOURCE: MAG POFF
Q: Would you discuss ordinary wills vs. living trusts on an estate that probably would require estate tax? Maybe you could give a reference to an unbiased book or two. I need any information that would make a good comparison for people who don't know which way to go.
A: Wills and living trusts are not mutually exclusive. You might or might not need a living trust, depending on your circumstances, but financial planners and others agreed that everyone should have a will regardless of whether they have set up a trust.
If your estate is at or near the taxable level of $600,000, you should see a lawyer immediately about preparing a will and engaging in estate-planning measures. You can take some steps to reduce your taxes, so be sure your lawyer is a specialist in wills and estates.
But creating a living trust is not one of those measures. You have to set up an irrevocable trust - in effect, giving your money away - if you want to save on taxes.
A revocable living trust doesn't save income or estate taxes that couldn't be saved through a proper will. It won't affect the amount of your estate subject to probate and taxation. Your living trust can still be attacked by unhappy heirs and descendants, just as a will can be. It won't eliminate delays in settling your estate. And it doesn't eliminate the need for a will.
But there are some advantages.
A living trust can help in managing your affairs while you are still alive. In fact, that is the primary benefit, especially for people who live alone. Your trustee can manage your property on your behalf, and for your benefit, in case you become disabled. Your trustee can also provide for other family members if you instruct him or her to do that as well. A living trust avoids the delay and hard feelings of a court-appointed guardianship in case of your disability.
If the trust is funded through a will only after your death, the trust provides a measure of privacy that is not possible under a will alone. Wills are public records, but living trusts are private. The same is true of a living trust that continues after death.
Living trusts are also easy to create and change at your desire. Changing a living trust is easier than writing a new will.
A living trust also helps when a person has assets in more than one or two states. It's easier for a trustee to take control of these assets than it is for the executor under a will.
You will pay fees both to write a will and to set up a living trust.
A simple book with some forms is the "Guide to Wills & Estates" prepared under the auspices of the American Bar Association. It was published in 1995 by Times Books, a division of Random House. The cost is $12.
LENGTH: Medium: 55 linesby CNB