Living trust lessens problems created when both parents die

Moneyline

January 16, 2000|By Liz Pulliam | Liz Pulliam,LOS ANGELES TIMES

I am married with two children, and I am concerned what would happen to our estate if my wife and I both died in an accident. Do we really need a living trust to avoid going to probate court before our minor children can inherit any assets?

Probably yes.

Probably, because chances are you wouldn't want to use the more common ways to avoid probate, since minor children are involved. Holding the title to your house as joint tenants, for example, would avoid having your home pass through probate, but it's unlikely you want to share title with an 8-year-old. Your wife might get a little cranky about being shut out, and Junior could very well decide to sell his half of the house when he turns 18 (technically, he could do that).

Pay-on-death accounts and life insurance proceeds also pass free of probate. But I'm guessing you'd like some adult supervision of the money. You can set up custodial arrangements for each account or life insurance policy, but that can be cumbersome.

Right now, you're playing the odds that you won't need a living trust. That's understandable -- it is unlikely you will both die at once. Besides, there are worse things in the world than probate. Although it can be expensive and protracted, the probate process does ensure that there is some court supervision over how your estate is settled.

Still, many smart couples decide to invest the $1,000 or so in getting a living trust drawn up so that they have some say in how their estate is handled without the expense of probate court. As a bonus, a properly designed living trust can also take care of your affairs should both of you become incapacitated. Say you're both in a car wreck and can't attend to your money or your kids; your living trust could kick in and allow someone else to look after both.

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