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will vs trust ?

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  • will vs trust ?

    Thinking about will vs living trust. My wife & I are 44. 3 kids, all minors 14, 12, 8. Net worth 1.1mill. Live in NY. We are both MDs - I am a W2 employee, she is in pvt practice part time but not a partner and no intention of becoming one. Assets: 1. House: Mortgage 700k to pay off, 500k in equity; 2. tax deferred Retirement accounts at work for both all w named beneficiaries; 3. pension for me w named beneficiaries; 4. brokerage accounts w named beneficiaries; 5. bank accounts w named beneficiaries; 6. 300k in 529 plans; 7. 2 cars worth 140k. No other real estate, nor busniesses. Wondering for our estate planning needs which seem simple to me given our assets and how many should simply pass to beneficiaries (only exceptions are house/cars) if a will/power of attorney/medical directives are all we need or is a living trust better for our situation? Given all kids currently minors does this factor into decision?

  • #2
    Caveat: divorced dad w minor kids, not a lawyer.

    You need a living trust and a “pour over” will- the will addresses anything not handled by the living trust. You should appoint a guardian for the minor children and whoever administers the trust will handle the financial issues while children are minors (or until age you set). The guardian and trust executor May be the same person - or not. Example for me - I die; mom has the kids; an executor will address the money until it goes directly to the kids.

    highly recommend book - “living trusts for everyone”. I was also shocked that a respected estate attorney reviewed the will & trust I did via NOLO library books and online forms during my divorce and said I didn’t need to redo them.


    • #3
      Living trust is different than a testamentary trust. Former is a choice that some prefer to avoid probate. I’ve decided against it mostly because the trust requires retitling assets, probate is generally simple where I live and, as gap55u points out, you need a pour over will anyway.

      That said, you do need a testamentary trust for your kids. You can design the living trust to act that way, or have the trust created on your death. I’m inclined to the latter since most of your assets are covered by beneficiary elections.

      Either way, you need to consider the legalities of establishing a trust as the beneficiary of your retirement accounts if you don’t want minor kids to inherit millions directly.


      • #4
        You need both. Will for your wishes and directions. Trust to provide for the kids.


        • #5
          You need a pour over will, a living or testamentary trust, and beneficiary designations.


          • #6
            Concur with the above. These are not either-or. Everyone needs a will. Not everyone needs a trust. Nolo is a great resource. I remember them back in the day when they offered more free advice than products but they are still excellent.
            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087