1st Marriage - First Marriage: Family Living Trusts

A Family living trust is the key part of an estate plan for families, especially a family with children. Having a living trust is really all about protecting your family. If you are like most people, you want to protect your spouse and your children above all else.

A family living trust protects them better than any other estate planning tool. Without a family trust, you are simply leaving too much at risk.

Here is a very common scenario:

Family 1 (Husband, wife, 2 small children) – NO ESTATE PLAN.
Scenario: Both parents die in an automobile accident.

  • Children go to live with the relative selected by the Court.

  • A probate on the estate of both parents is undertaken for the next 12-18 months. Lawyer fees are calculated based on a percentage of the estate without offset for any loans. For example, if the family home is worth $750,000, then the probate fee is $18,000 plus the cost of experts, accountants, real estate salespeople, auctioneer, etc.

  • One family member goes to the house to collect some valuable possessions that you “no longer need” and that they know you would want them to have. They also take a few other things- just to make sure no one else does; and now they just are “lost” to your children forever.

  • Other family members decide whether to keep you on life support and/or donate your organs.

  • Your family and your spouse’s family fight about where to bury you and your spouse. While the fighting is going on, your bodies are held in the mortuary for a daily fee.

  • All family belongings are sold and the funds are put into a bank account earning little-to-no interest.

  • Each year, an accountant and lawyer prepare an accounting and go to court to verify that the money is still in the account. While verification of the funds is a good idea, the estate pays the lawyer and account each year to do this at considerable cost to the estate from which they deduct their fees.

  • Then, when each child turns 18, the court gives one half of the money given to each child on their 18th birthday.

So the Court system went from over-protecting the funds by having the accountant and lawyer do yearly accountings and reports to no restrictions of any kind with 100% outright disbursement to an 18 year old.

While we all like to think our children are mature at 18 years of age, most teenagers do not have the experience necessary to really make good use of their inheritance to make a lasting investment to benefit them for the rest of their lives. Can you imagine a time when your child did not make the best decision? Now envision your child with an atm card that has your life’s savings at their fingertips in that moment when they are not focusing 100% on their long-term future.

Maybe you don’t mind your children learning from their mistakes, but most people just don’t want to risk that. They know that most people, let alone 18 year old children, who receive “free money” without earning it, don’t keep it for very long. They just don’t appreciate the blood, sweat and tears that went into earning it. Most people also realize that “easy money” can start a lifetime addiction to free-spending on cars, alcohol, drugs, etc.  And, unfortunately, there are too many other people out there who will be more than willing to enjoy spending that money with your children.

So those are just some of the problems with NOT having a complete estate plan with a family living trust and other estate planning documents. Now lets look at that same situation if the family DID HAVE A FAMILY LIVING TRUST:

Family 1 (Husband, wife, 2 small children) WITH a PROPER ESTATE PLAN
Scenario: Both parents die in an automobile accident.

  • Their estate plan informs the doctors whether they are to be put onto life support or not.

  • Their estate plan informs the doctors on whether to donate their organs or not.

  • Their estate plan lets everyone know where they are to be buried and their last funeral arrangements.

  • Their estate plan tells the Court who the Parents want their children to live with.

  • Their estate plan keeps the family house for the Children to grow up in.

  • Their estate plan itemizes each family heirloom and gives each special person an heirloom to remember them.

  • Their estate plan hires an investment company to grow their assets so that their kids can benefit from sound financial advice.

  • Their estate plan provides for 3 distributions for each child at the ages selected by the parents.

  • Their estate plan sets aside a portion of each child’s inheritance for college and for the down-payment on their first house.

  • Their estate plan even sets aside a portion for the grandchildren to remember them.

  • Their estate plan donates a small portion of their estate to the church or charity of their choice.

  • Their family lawyer, who drafted their estate plan, assists the family with all of this; so that it all goes as smoothly as the parents who trusted him intended it to be.

Don’t delay any longer, show your loved ones that you love them by creating your family living trust today. Call us at 800-501-9620 for a free appointment.