Can you please explain the difference between a will and a trust? Which do you recommend? --Mark
Everyone needs a will, but not everyone needs a trust. A trust is something you put money into after your death by virtue of your will. A will, on the other hand, tells everyone what to do with your stuff when you die. One of the things it could instruct people to do is put some of your money into a trust for your kids. It would become their money when they grow up, but until then it would be managed for them in a trust account.
These days there’s also an animal running around called a living trust. This is a document that will cost you anywhere from $1,500 to $4,000 to have drawn up, and it’s really overdone in the estate planning world. It’s not needed nearly as much as some people would have you think. To tell the truth, it’s more of a gimmick than anything else. The idea is that you put everything you own in trust now, and when you die you save on probate taxes.
It’s a good theory, but the downside is that once you do it you have to operate your life in a trust. And that’s a real pain in the butt! --Dave