Advantages of a living trust over a standard will?

September 28, 2007 11:49 AM

My husband and I are retired, in our early 60's, good health, no kids or close family and we don't have a will. I lie awake at night and worry about this. We don't own any property right now but do have a house full of furniture, some vintage art posters, joint mutual funds, IRA's, deferred comp, a leased car etc. I was going to download a standard "will" form but my friend said we needed to get a living trust so the survivor wouldn't have to go through probate court which can be costly. Do we need to have an executor in either case? Does anyone have any advice on what would be best for people like us - our assets are under 500k. We live in Illinois. Thanks!
posted by Tullyogallaghan to law & government (19 comments total)

Your best bet would be to consult an attorney. We did this awhile back, and while our needs were a bit more complicated, it didn't cost all that much and we got durable powers of attorney out of it along with trusteeship docs for the kids.

It wasn't completely unexpected, but our attorney (who happened to be a family friend) cautioned against the do-it-yourself route, citing some specific items peculiar to Georgia law that the downloadable forms usually didn't consider.
posted by jquinby at 12:01 PM on September 28, 2007

If you're married, you'll each inherit everything from the other in case of one's death and you shouldn't have to worry about taxes. It's only inheritance outside of marriage that brings on these confusing tax issues.
posted by croutonsupafreak at 12:06 PM on September 28, 2007

You'll be fine no big evil taxes, noboby is after your assets.

Makes MORE sense to be sure the care instructions are correct so you or your mate have control over the end of life issues.

Money? You're too poor to have much to worry about.

Find a third person you trust to be a voice for you if you are gravely ill and write down what you want in a valid document.
posted by Freedomboy at 12:29 PM on September 28, 2007

I see the big issue as what to do with your assets in the event you both perish at the same time. If you have no children or family, the state might take your assets. I would get a will that protects you both now and designates to whom your assets go (favorite charity, school, neighbor, etc) when as and if you both die.
posted by JohnnyGunn at 12:46 PM on September 28, 2007

My husband and I had our wills done by a lawer, and it was only a few hundred bucks. At an hourly rate, considering how long it would've taken me to find the right forms and make sure we were filling them out in a legally-appropriate way if we'd done it ourselves, hiring a lawyer was worth it.
posted by The corpse in the library at 1:04 PM on September 28, 2007

As an attorney, I cannot emphasize enough that you need to make an appointment in your area with a competent Trusts and Estates lawyer. There are too many ifs ands and buts to get anything resembling a competent answer here.

To find a good lawyer, ask one you already know for his or her recommendation as to the best one for your particular job.
posted by Ironmouth at 1:12 PM on September 28, 2007

Do not download any forms off the internet and do not listen to any advice you get here other than "call a lawyer". You have to do a cost/benefit analysis here: your cost to have a lawyer that specializes in trusts and estates draw up a binding will for both you and your husband should be a couple of hundred dollars (a buddy of mine started out doing them for $50 a pop). The benefit is no more sleepless nights and the fact that you or your husband won't get royally screwed down the road. Follow the directions on this page and make an appointment. You might not be glad that you did in the short term, but long term, you will thank me.
posted by ND¢ at 1:27 PM on September 28, 2007

One thing that is often overlooked is the "payable on death" beneficiary for IRA's, mutual funds, and bank accounts. You probably want to have each other down for this on any individual accounts.

You and your spouse should automatically inherit from each other (at least in most states). It will make things easier on the paperwork (The paperwork for the survivor, not the paperwork you would do now) if you just own things jointly with right of survivorship, but there might be other reasons why you might not want to things this way. If you both die, you won't have any control over where the money goes -- but this is hardly something you need to stay awake at night worrying about.

You should see someone who can help you with estate and end of life planning.
posted by yohko at 1:35 PM on September 28, 2007

IL does not have POD; it's been illegal in that state for decades. The current version is "in trust for". It's supposed to be the same thing.
posted by unrepentanthippie at 1:51 PM on September 28, 2007

It cost us less than $200 to get a lawyer to draw up a simple will for a similar size estate. For another $100 we got advanced directives ("living wills"). Call an attorney. Spend the money. Get the piece of mind.
posted by OlderThanTOS at 1:55 PM on September 28, 2007

Sorry, I should have specified. That's on bank accounts. The banks claims it's the same thing as POD.
posted by unrepentanthippie at 1:57 PM on September 28, 2007

Obviously you should go talk to an attorney. But in most states your spouse inherits automatically. Assuming you want to leave them everything, you probably don't need to do anything. But the whole "avoiding probate" angle might make it worthwhile, or there might be some tax benefits if you have a lot of assets and shelter them right. And of course, you might want to consider a will in case you both die simultaneously.

I think many attorneys who regularly do wills and trusts will have a flat rate if your situation is uncomplicated, since 90% of what they're going to be writing is boiler-plate. (It's just a matter of picking which boiler-plate...)

Personally I'd spend your time on a living will and medical power of attorney first, just in case both of you end up in a hospital incapacitated, so that your medical wishes are taken into consideration even if the spouse can't speak for you.
posted by Kadin2048 at 2:21 PM on September 28, 2007

A living trust skips probate. Anything with a listed beneficiary also skips probate. Assuming your IRAs have listed beneficiaries, this means they'll skip probate, too.

You do want to skip probate because it takes forever and the state charges you for it.

I suspect a living trust will be useful to you, and will pay for itself in probate cost savings, but only an estate attorney will know for sure. (Your investment advisor should have a pretty good idea, too, but get it from the horse's mouth.)

You will need a living trust in addition to a will, not instead of one.

I would like to emphasize that you should find someone who specializes in estate planning. For some reason a lot of attorneys are unable to admit that they aren't the expert in every aspect of law. Although he probably took a class on it in college, your criminal defense or divorce attorney brother in law is not the person to do this stuff for you.

Here in Northern California, if your estate situation is as simple as it sounds, you'd be able to get the whole package (will, trust, advanced medical directive, powers of attorney) for $2000 or less, probably. I don't know the going rates in Illinois.

I would like to add that I just spent 10 minutes looking for Illinois's probate fee page and came away frustrated with the lack of organization of the State of Illinois web pages. All I can find are private pages posted by law firms. It looks like it's possible even, that fees vary county by county. I hope that's not true (talk about making a complicated subject even more so!), but it makes me recommend even more stongly that you solicit the help of an attorney.
posted by small_ruminant at 2:25 PM on September 28, 2007

small_ruminant is right. You are looking for a specialist. Ask a lawyer you do know for the name of one that specializes in trust and estates work. I hope that was clear from my earlier post.
posted by Ironmouth at 2:32 PM on September 28, 2007

I lie awake at night and worry about this.

That's a pretty good reason to justify the expense of consulting an attorney.
posted by cribcage at 4:31 PM on September 28, 2007

One of my questions from a while back has even more of the never-ending "you need a lawyer - no you don't" debate as well as thoughts on cost. From personal experience I wouldn't try to negotiate this without a lawyer. There are difficult and region-specific issues and the potential cost of screwing it up is too high.
posted by nanojath at 5:18 PM on September 28, 2007

if your estate situation is as simple as it sounds, you'd be able to get the whole package (will, trust, advanced medical directive, powers of attorney) for $2000 or less, probably. I don't know the going rates in Illinois.

do people really pay $2000 to draw up a simple will? That seems inordinately expensive.
posted by any major dude at 6:39 PM on September 28, 2007

In the San Francisco bay area I believe that $2000 is the higher end for the package that includes a will, one or more trusts, both advanced medical directives, plus medical and financial powers of attorney. That assumes you have a straight-forward situation and aren't looking for the more elaborate estate tax avoidance vehicles that large estates need.

At the amount of money Tullyogallaghan and her husband have (if that's really all they have- people are often surprised at how big their taxable estate really is, after retirement plans and houses are figured in), nothing elaborate would usually be called for.
posted by small_ruminant at 9:10 PM on September 28, 2007

As always, Nolo Press has books on wills and trusts. Even if your ultimate move is to see a lawyer, the books could help you organize your materials and sketch out some rough plans.
posted by ClaudiaCenter at 6:59 PM on September 29, 2007