Protect yourself and your loved ones

Guide to Family Discussion

If you are finding it difficult to approach parents or grandparents regarding the inheritance of their estate, this is a fictional conversation I have created to help you get started.  If they won’t discuss it in person, try sending them a copy of this guide.

Advisor: Hello! It’s great to see you both. I understand you’re looking to secure your children’s future, especially when it comes to your house. You’re considering whether a will or a trust might be the best way to handle this, correct?

Couple: Yes, exactly. We’re a bit confused about the differences and which would be best for our situation.

Advisor: Let’s start with the basics. A will is a document that outlines your wishes regarding the distribution of your assets and the care of any minor children when you pass away. It’s a straightforward way to express your intentions, but it does have to go through probate, which can be a lengthy and public process.  Your kids could have expenses and taxes they can’t afford.  It could result in having to sell the house.

Couple: We’ve heard a bit about probate. It sounds like something we’d prefer to avoid if possible.

Advisor: Understandably so. Probate can sometimes be time-consuming and costly. That’s where a trust can come into play. A trust is a legal arrangement where you transfer your assets into the trust to be managed by a trustee for the benefit of your children or other beneficiaries. One of the biggest advantages is that it bypasses the probate process, allowing for a potentially smoother and quicker transfer of assets.

Couple: Does that mean a trust is better than a will for us?

Advisor: It depends on your specific circumstances. Trusts offer more privacy and can provide you with more control over when and how your assets are distributed. For example, you can stipulate that your children only receive their inheritance at a certain age or upon meeting certain milestones, like graduating from college.

Couple: That sounds useful. We like the idea of setting conditions to ensure the assets are used wisely. What about the house, though? We’re still paying off the mortgage.

Advisor: Great question. With a trust, you can place the house into it, even if you’re still paying the mortgage. This means the trust owns the house, but you continue to live in it and make mortgage payments. Upon your passing, the house—along with any remaining mortgage—can be passed directly to your children without going through probate. This can simplify the process significantly.

Couple: And if we just had a will?

Advisor: If you only have a will, the house would still go to your children, but it would have to go through probate first. This could delay their ability to take ownership and might involve additional costs. If you’re concerned about ensuring a smooth transition, a trust could offer more benefits in this situation.

Couple: We’re starting to lean towards a trust, but we’re worried about the cost and complexity of setting it up. Is it really that complicated?

Advisor: Setting up a trust is more complex and costly upfront than a will, but think of it as an investment in your family’s future. It can save a lot of time and expense later by avoiding probate and can provide you with more flexibility and control over your assets. I recommend working with a specialized attorney to ensure it’s set up correctly and reflects your wishes accurately.

Couple: What happens with a trust if we have more children, or if our circumstances change?

Advisor: That’s another advantage of a trust; it can be designed to be revocable, which means you can make changes to it as your life circumstances change. This includes adding beneficiaries, like if you were to have more children or if you wanted to include other family members or charities as part of your estate plan.

Couple: It seems like a trust offers a lot of benefits for our situation, especially with the house and providing for our children.

Advisor: Exactly. A trust can offer a streamlined and flexible approach to estate planning, especially for families with specific wishes on how their assets should be handled and distributed. It’s also a way to help protect your estate for your children’s future, ensuring they are taken care of in the way you intend.

Couple: This has been incredibly helpful. We need to think about how we want to proceed, but it sounds like setting up a trust might be the best path forward for us.

Advisor: I’m glad I could help clarify things! It’s an important decision and taking the time to consider your options is wise.

Couple: Thank you so much. We really appreciate your advice and assistance. We’ll definitely be in touch once we’ve had a chance to discuss it further.

Advisor: You’re very welcome! Remember, planning for the future is one of the most caring things you can do for your family.

This conversation aims to provide a general understanding of wills and trusts in the context of estate planning. Each situation is unique, so it’s essential to consult with a legal professional to determine the best approach for your specific circumstances.

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