Originally Posted by Birchwood
We have a living will which we did ourselves. Now that we are close to
retirement, we thought about updating it with a Living Trust. We spoke
with a general family attorney and she said, that since our asset is more
than 500K, it is better to talk with an attorney that specialized in Living trust or estate? I did not think that this is so complex. She said that this trust will minimize my heir with taxes! It will avoid probate, etc.
A living will specifies your medical wishes should you become incapacitated.
There are benefits to both a will/probate approach and the (living) trust (RLT) approach.
The living trust, is a revokable trust you (and perhaps a spouse) control while you are alive that specifies who gets what when you die. If your assets are small and most things go to the spouse then a will may be the right way to go.
As your attorney states - a trust avoids probate but is somewhat costly up-front. A will goes through probate but since your estate is small the probate fees will be modest. Note that many banks/mutual funds have their own stated benificiaries. In those cases those assets pass directly to the benificiaries outside of probate. You can also title your house such that the spouse will retain full ownership when you go.
There are no estate taxes unless the estate is larger than $5.34MM (in 2014 and grows with inflation after that). So keep that in mnd when the attorney suggests the heirs will have to pay estate taxes. The surviving spouse has an unlimited deduction on estate taxes. Therefore, for normal eastates, t's only after the last spouse dies that estate taxes come into play.
If you have (successor trustee) relatives that are ethically challenged and may seek to cheat others to their own benefit then a will/probate is the way to go. A will/probate is court supervised. A trust is not supervised. There are no trust police to stop dishonest trustees.
A trust is private. That keeps your affairs out of the limelight/. A will/probate is kind of public and out in the open.
A trust is (arguably) the harder estate to administer compared to a normal probate and will estate.
My personal opinion is that living trusts are oversold by the "trust-mills" that get income from setting up trusts. For many people of modest means a normal will/probate is the better way to go (in my opinion).
For large estates or estates with complex issues a trust is the way to go.
As always there are some things that make estate distribution tricky. Should you have any special situations you should consult qualified legal resources.