Blog

Segregate your assets in estate planning

I met recently with a single mom who has a few bucks in the bank in savings and CDs, a growing 401k and also a couple of life insurance policies.  With a minor child her focus is on protecting the assets for her child of course.  In her case a living trust is not mandatory but it certainly would make things easier for her chosen executor and trustee, and also much cheaper for her daughter. That is, much cheaper and more efficient, than a simple will or will with testamentary trust.

However, it does cost more now to get a living trust. There is no question about it. Legal fees are more and thus it costs more.  It costs more NOW but saves a lot of money LATER and makes for simple and efficient distribution. Thus a lot of people prefer the living trust to the standard will.

Now let’s talk about the segregation issue….

When you get married most people do not ask for a pre-nuptial agreement, or pre-nup, as it’s an uncomfortable topic.  Let me start by saying that segregating assets in a living trust is NOT as good as a living trust but it certainly goes a long way toward showing what are your assets. That is, what’s your separate property as opposed to community property you have with your spouse if you get married at a later date.

I thus encourage single people to get a trust and put all their assets into that trust. Once marriage I encourage them to not put another dime into that trust. To do would co-mingle the assets and that’s of course not good if you get divorced.  Holding assets in trust, and keeping them completely separate, does go a long way toward establishing what is one’s separate property.  I thus encourage you to get a trust and put your assets into that trust before marriage.

Also, once married make sure you amend your trust to reflect that you are married. That can open a whole can of worms if you die unexpectedly.

Contact me to discuss your estate!  -John