Julie is to be congratulated for making 'just in case' plans. Far
too many parents assume that nothing will happen to them and fail
to take the necessary precautions. Unfortunately, the simple
answer to her question is "no" I don't advise trying to set up a
trust without a lawyer. But let's look a little deeper into
Julie's question. Perhaps it won't be as expensive as she thinks.
We'll begin by considering a frugal truism. Avoid making
expensive mistakes. A problem with your will or some trusts are
almost impossible to correct. There's a reason that they call it
your "LAST will and testament". Once you're dead you cannot amend
or revoke it.
Being a sharp consumer doesn't mean always taking the least
expensive alternative. In fact, doing that can sometimes cost you
more in the long run. This is probably one of those cases.
In fact, not only should Julie contact an attorney for her will
or trust, she'd also be wise to find one that specializes in
estate planning in her state. There are some nuances that an
attorney who works in another area of law or another state might
not know. In fact, if you move to a new state it's important to
see if your estate plan should be updated.
Let me be clear about this. I'm not a big fan of attorneys. Wills
and trusts are more complicated than they need to be. And
attorneys are a large part of the reason that they're so
But the unfortunate truth is that it does take specialized
knowledge to do them so that problems don't crop up after your
death. Not only with federal taxes, but also with state laws. And
much as I don't like paying lawyers, the cost of doing it wrong
could be very expensive for my children. So finding a lawyer who
knows estate planning is likely to produce the right document at
the lowest cost.
Julie might be tempted to consider some of the do-it-yourself
will kits available. No doubt that some are quite good. Just
remember that you'll die believing you did a great job. A problem
won't come out until some judge says that your will or certain
portions are invalid. So make your selection carefully.
So what should Julie do? She doesn't say so, but it could be that
her concern is simply for her children's welfare. If that's the
case a living trust probably isn't required.
Selecting a guardian is important. Remember that each state sets
an age where a child is considered an adult. Until that age they
cannot manage their own financial affairs. The guardian could be
an individual (for example your sister, friend or attorney) or a
corporation (a bank or trust company). There are various ways,
including trusts, to set it up legally. You also have the option
of letting the guardian control the money even after your
children reach adulthood. Discuss it with your attorney.
Another reason this process, called estate planning, is important
is that if you don't make your wishes known in writing before you
die, the state will follow its own laws and make the decision for
you. Not only as to managing the money, but who will raise your
children. Your irresponsible bachelor brother could be asked to
care for them. This is also a good time for Julie to talk with
her choice and make sure that they're willing to accept the
One final word of caution. I am not a lawyer and this isn't a
place for amateurs. All I can do is warn you of the potential
dangers. So before you make any decisions, contact the
appropriate experts. Yes, experts do cost money. But this is one
area where saving can be very expensive.
Gary Foreman is a former financial planner who currently edits
The Dollar Stretcher newsletters and website
<www.TheDollarStretcher.com> You'll find hundreds of articles to
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