By: Martin M. Shenkman, CPA, MBA, JD
Introduction/Overview: Lots of folks believe living trusts (also called revocable living trusts or loving trusts) are the cornerstone of their estate plan. There is no question that properly done living trusts are a great planning tool, but do you still need other documents? What is the relationship of other documents to your living trust?
√ Question: What about beneficiary designations?
√ Answer: The beneficiary of your life insurance, IRA, annuity and so forth, will receive those assets directly upon death so that they generally will not name your revocable trust. If your objective was avoiding probate, that is already done by the beneficiary designation. However, if you want the money in a trust, you have to consider naming your trust as a beneficiary. But, talk to your CPA, there could be tax problems.
√ Question: What about a will?
√ Answer: Most people with living trusts use a "pour over" will - it pours any assets not in the trust into it at death. You still need a will to appoint guardians for minor children and deal with assets not in your trust. Be cautious that having a pour over will doesn't mean you shouldn't bother transferring assets to your revocable trust. To get the benefits your trust provides if you are disabled you're better off funding it.
√ Question: What about living wills and health proxies?
√ Answer: These documents are always needed. The trustee can use trust money to pay for care, but cannot make medical decisions.
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