Episode 26
In this episode of Getting Money Right we’re talking about estate planning and what you need to know about wills and living trusts so you can be prepared to manage your assets and ensure your family is taken care of even after you’re gone.


60% of Americans do not have a plan for how their estate will be handled after they die.  

  • Perhaps it’s because they’re in good health or young and don’t feel they need to worry about it right now. Unfortunately, life is unpredictable and no one is guaranteed tomorrow.

  • No matter what age you are, if you’re an adult and have any assets you should have an estate plan.

  • If you think you don’t have any assets you’re wrong.

  • If you have a checking or savings account, own a car, a home, life insurance, furniture, or any personal possessions, you have assets and you need an estate plan.

  • Life insurance - you should have enough coverage for you and your spouse to provide for your children in case you or you and your spouse pass unexpectedly.

  • An estate plan is vital if you both die and you have children.

What is an estate plan?

  • An estate plan is simply a plan for how your assets will be managed or distributed after you’re gone.

  • No doubt you’ve heard of a will. A will is one instrument you can use to direct how your assets will be handled.

  • A better instrument is a living trust because it better protects your assets, which is what you should be after.

Why should I have an estate plan?

  • Aside from the financial benefit of having an estate plan, the most important reason to have one is to protect your family.

  • We’ve all heard of family’s squabbling over mom's and dad’s estate. Don’t hope your heirs will play nice, guarantee it.

  • Not having an estate plan puts the pressure on the family to divide your assets in a way that’s good for everyone, which is asking a lot.

  • An estate plan allows you to decide how you want your assets divided. If anyone’s unhappy about the division of the estate, they’ll be unhappy with you, and not each other.

What’s the difference between a will and a living trust?

  • A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children.

  • A living trust includes a will for your medical directives, while giving you the most protection and control of your financial assets.

  • Because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated. The court could easily take control of your assets even before you die.

  • A revocable living trust lets you keep control of your assets while you are living - even if you become incapacitated, as well as after you die.

Why is a living trust better than a will?

  • A living trust will avoid probate while a will will not.

  • Probate is a legal process through which the court ensures that, when you die, your debts are paid and your assets are distributed according to your wishes.

  • If you don’t have a living trust, your assets are distributed according to state law.

  • A living trust can include a will and is used to designate how assets, that are not included in the trust, are to be distributed. Sometimes people don't move all their assets to the trust or obtain properties after the trust is created so they need a way to dictate how those assets are to be disbursed.


Why you should avoid probate

1. It can be expensive

  • Probate will cost the estate legal fees, executor fees, and other court costs, which must be paid before the assets can be distributed to your heirs.

  • The more assets you own and more dispersed they are the more costliest probate will be.

2. It takes time

  • Probate can take anywhere from 9 months to 2 years but can be longer. Your assets will be frozen at least part of the time until an inventory can be made. Nothing can be distributed without a court and executor approval. This could affect your family should they need the money to live on.

3. It’s public

  • Probate is a public process, so anyone can see what you owned, whom you owed, and who will receive your assets.

  • This exposes your heirs to unscrupulous solicitors and can cause disgruntled heirs to contest your will.

What are the benefits of a living trust?

1. It Avoids probate

  • A living trust will keep your estate out of probate saving money and time and keeping your estate private.

2. Reduces or eliminates estate taxes

  • Federal estate taxes can be expensive (35%-55%) and they must be paid in cash, usually within 9 months after you die.

  • A living trust gives you the capability to control and manage your assets so you can legally reduce or eliminate estate taxes.

  • One way to reduce estate taxes is to reduce the size of your estate before you die.

    • Spend some of it and enjoy it!

    • Give some of your estate to your heirs before you die. You’ll experience the satisfaction of seeing your gift bless your kids, grandkids, or perhaps a non-profit organization, something you won’t be able to experience if you wait until you die.

    • You’re allowed to give up to $14,000 to as many individuals as you like. Couples can give $28,000 per year.

    • Example: A couple can give $14K to each of their 4 children for a total of $112,000 per year.

    • Give to causes you care about

3. Provides full control of your estate

  • As the trustee of your estate, while you’re alive, you can manage your assets as you wish.

  • The trustee you designate will manage your estate after your death, ensuring your wishes are carried out, all along your assets are protected and guarded against unnecessary expenses.

4. Customized distribution of your assets

  • Through a living trust you can designate who will receive your assets, retirement benefits, and proceeds from a life insurance policy.

  • You can direct the guardianship of your children – especially if any of them have special needs, to whomever you think is best suited to raise them.

  • If your children are minors or young adults, you can coordinate the release of fund from the trust based on a timeline and the financial maturity of your children.


An estate plan is for everyone.  At the very least you should have a will.  A better option is a living trust.  Although it's more involved than a basic will and may require an estate attorney to set up, don't let that stop you.  The benefits are more than worth the expense because it provides the protection and flexibility you want for managing your estate.