(KTVI) - Planning for what happens to your assets after you’re gone is a big piece of the financial planning puzzle. Yet there are many factors to consider, and many options to weed through. Bob Wamhoff, President of Wamhoff Financial Planning & Accounting, offers the pros and cons of two popular options – Wills and Living Trusts.
1. What is a will?
- A Last Will & Testament is a legal document stating WHERE your assets will go.
- It takes effect upon your passing.
- A will can appoint guardians for your dependent children.
- A will must go through probate upon your passing, at which time wills are made public.
- Depending on the complexity, it can cost $50 - $1500 to create
2. What is a living trust?
- A living trust creates a legal entity that can hold assets and state not only WHERE, but also WHEN and HOW your assets will be distributed.
- It takes effect the date it is signed.
- A living trust does not replace a will, but works in conjunction with a special type of will called a “pour over will,” which often lists the living trust as the beneficiary.
- If you have a living trust, you must be diligent about putting your assets in the trust.
- A living trust can help your assets avoid probate, and can potentially reduce estate taxes.
- Creating a living trust can be costly, at $300 - $5000 depending on the complexity.
3. Do I need a will or a living trust?
- Consider the size of your estate and number of assets you have. If you have many assets, and many folks who will receive those assets, a living trust may be a good idea. If your estate is simple, a will may suffice.
- Is your estate likely to be contested? If not, a will may serve you fine.
- Do you have young beneficiaries? If so, you may want to hold their assets in trust.
The bottom line – do something. Don’t leave your assets to chance once you’re gone.