Our estate planning includes a revocable living trust instead of a will. We had the revocable living trust drawn up about five years ago because our family situation had changed dramatically.
We first sat down with an estate planning attorney who helped us make a will shortly after our first two sons came in to our home through the foster care system in 1990. Within five years after adopting our four children, our will was out of date but we hadn’t updated it.
A decade later, when we had a trip scheduled to Europe, we decided to update our will. Then we learned about a revocable living trust which we felt would be a better document to draw up since one of our children has special needs and would likely need care throughout her adult life. The trust we drew up is able to accommodate their special needs.
Revocable Living Trust or Will?
A revocable living trust is an estate planning tool that allows for the management of property while one is alive; a will provides directions for disposing of an estate after a death. A revocable living trust allows one to remove assets from or transfer assets to the trust at any time.
Key Definitions of a Living Trust
Settlor or grantor: person who creates the trust
Trustee and co-trustee: person, or people, who manages the trust
Beneficiaries: those who will receive income and assets in the trust
My wife and I are both the settlor (grantor) since we drew up the trust and we are also the current trustees. We have appointed a family friend as trustee upon our death. According to a point in our document, the trust “contains our instructions for our own well-being and that of our loved ones.”
All of our property is assigned and held in our trust except for our retirement plans “because this would result in immediate income taxation.”
Initially funding a trust may be done with as little as $10.
We have complete decision-making powers over our trust: “While we are both living, we shall retain all rights, privileges and obligations regarding our tenancy by the entirety property as if that property were free of our trust.”
Our trust did not need a new tax identification. Our social security numbers are sufficient.
The needs of our children (and the ones with special needs) are addressed in an article related to the distribution of our trust property. We set out a percentage of shares of our children that would receive the distribution and we have set out percentages that would go to our charities.
Related to caring for special needs the trust provides for needs “which are not otherwise provided by governmental financial assistance and benefits, or by the providers of services.”
The trust also lists what constitutes “special needs.”
Cost of a Living Trust
Most families can have trusts drafted for less than $4,000. We had ours drafted for less than $3,000 in 2006 and we had changes recently made to it for just over $600.
Finding an Attorney
Check with local non-profit organizations if they utilize the services and knowledge of an estate planning attorney. Log on to the National Network of Estate Planning Attorneys to learn the basics of estate planning and to locate an attorney who can assist.
Estate planning is not an activity only for “wealthy” people. It is for anyone who has property they wish to leave for others or have distributed after their death in a manner they deem appropriate.
Having an estate plan is a way to avoid probate and having your state of residence decide what should be done with your assets after your death.
For a related article on Associated Content, read Managing Employees in Crisis with Special Needs Children.