If you already have a will to spell out how you want your assets managed after your death, then you’re more prepared than most. Incredibly, 58% of Americans don’t have a will, according to a 2017 survey by Caring.com.
But even if you have a will and think your financial situation is pretty standard, there’s another question you should be asking: “Do I need a trust?” You might be surprised. A revocable living trust can be a useful estate-planning tool for people at all income levels, not just for the very rich, says Lisa Montano, an Estate Planning Strategist for Wells Fargo Advisors.
Knowing the basics
“It depends on your individual circumstances, but most people should at least consider a revocable living trust,” Montano says. “People think trusts are just a tool to avoid estate taxes, but they have a lot of other advantages.”
While most people know the basics of why they need a will — to keep the distribution of your estate from being tied up in court — one thing that may keep people from setting up a trust is a lack of understanding of how it works. You set up the trust while you’re alive and then transfer your property and other assets into the trust. Most people name themselves as the trustee — the person who manages the assets within the trust — but you can also choose someone else or an institution to be the trustee. If you are serving as trustee, you’ll also need to name a successor trustee to distribute your assets at your death.
A properly created living trust may be more expensive to set up than a simple will, but it gives you greater control over when and how your assets will be distributed after your death, Montano says. For example, you can set it up so that your assets will be distributed over time to your beneficiaries, in amounts that you specify.