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In providing answers, neither Suze Orman Media nor Suze Orman is acting as a certified financial planner or advisor or certified financial analyst and economist, CPA, account accountant, or lawyer. Neither Suze Orman Media nor Suze Orman makes any recommendations as to any specific securities or investments. All content is for informational and general purposes only and does not constitute financial, accounting, or legal advice. You should consult your own tax, legal, and financial advisors regarding your situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any loss which may arise from accessing or relying on information in this audiobook. And to the fullest extent permitted by law we exclude all liability for loss or damages, direct or indirect, arising from the use of the information.

Frequently Asked Questions:

What is a Living Revocable Trust?

There are many types of trusts. A living revocable trust is the right trust for the vast majority of you.

Let’s take this word by word:

Living: A trust is effective during your lifetime.

Revocable: Everything you state in the trust can be changed. At any time. That’s what revocable means. So relax. This is a legal document that you can change as your life changes.

Trust: Once you create a trust you can move the ownership of key assets –such as a home and other property – into the trust and appoint yourself as the trustee, meaning you call all the shots on how to use and manage those assets while you are alive. You also appoint someone to be your successor trustee. If you become incapacitated, the successor trustee can step in easily and manage your affairs. Or, when you die, the successor trustee takes over without the need to get any court approval.

A living revocable trust is one of the four legal documents that I believe everyone must have and is included in my Will & Trust Kit.

What is a Will?

While your big-ticket assets, such as a home, should be owned by your trust, you likely have other smaller keepsakes –a china collection, watches etc. – that you want to give to a specific person. A will is the legal document that states where you want these assets to go after your death.

A will is also where you can write down your funeral wishes.

If you have young children, you must, must, must have a will. A will is where you appoint a guardian for minor children. I realize thinking about this can be upsetting, but let’s talk about something even more upsetting: if you die without a will that establishes your children’s’ guardians, decisions about the care of your kids are going to fall to the court system. That’s what happens when parents die without a legal guardian ready to step in. Sure, a sibling or cousin or dear friend might end up as the guardian, but only after a draining court process, and potentially ongoing court oversight.

A will is one of the four legal documents that I believe everyone must have and is included in my Will & Trust Kit.

What is a Durable Power of Attorney for Health Care?

A durable power of attorney for health care (sometimes known as a health care proxy), is a person you appoint who will step in and discuss your care with your doctors if you ever become unable to do so for yourself.

Without a health care proxy in place, you are potentially creating a difficult situation for your family if there are disagreements on care. What a horrible time for them to be arguing. By having a health care proxy, you are telling your family: “This is the person who I have chosen to make the decisions.” That also will help your medical team. Being able to get quick clear guidance from the health care proxy, rather than having to navigate family discord, can speed up your treatment.

A durable power of attorney for health care with an advance directive is one of the four legal documents that I believe everyone must have and is included in my Will & Trust Kit.

What is a Financial Power of Attorney?

A financial power of attorney is important because certain assets, such as your 401(k), IRAs and pensions don’t belong in your trust. And for other types of assets, such as bank accounts and regular brokerage accounts, sometimes the institution gets cranky about accepting trust documents.

In the event you ever need help managing those accounts while you are alive, a financial power of attorney is the official document that gives someone you appoint the authority to step in.

A financial power of attorney document is also going to smooth out having someone help you manage other accounts. Utility companies, credit card issuers, the management company for your lease, won’t share information with anyone not named on your account. With this document your appointed representative will be able to easily step in and help manage your affairs.

Whether it is a sudden illness such as the coronavirus or the onset of dementia later in life, a financial power of attorney is such an important step to protect yourself from financial issues.

A financial power of attorney is one of the four legal documents that I believe everyone must have and is included in my Will & Trust Kit.

What is the difference between a Will and a Trust?

The difference between a will and a trust is when they kick into action.

A will lays out your wishes for after you die.

A living revocable trust becomes effective immediately. While you are alive you can be in full charge of your trust. And when you become incapacitated or die, the person you appoint as the successor trustee can easily step in and handle your affairs exactly as you have laid out in the document.

You love your family more than anything, right? Having both a will and a trust is a powerful way you show your love. It will save your family time and money. And the heartache of squabbles if you were to die and not leave clear instructions on who is to get what.

Do I need a Trust if I am not wealthy?

Having a trust, no matter your current financial status, is always a good idea.

It is important to understand that if you only have a will, when you die your family may have to go through a lengthy court process to have the right to follow what you laid out in your will. This is called probate. In addition to being time-consuming and costly (you likely will need to hire a lawyer) it is also public. When you die with only a will, that document must be filed with the court, and can be accessed by anyone.

Smaller estates may be able to avoid probate if the deceased only had a will; but in most states, the cut off for what amount qualifies for a “simplified” probate is low.

The surest way to avoid probate is to have a trust. A living revocable trust does not need court approval. Everything stays private, and your successor trustee can take over its management immediately upon your death.

Is it harder to contest a Trust or a Will?

It's generally much harder to contest a trust than a will because the trust is something that you live with over a period of time.

This is because s trust is something that is an existence, something that you work with during your lifetime, something you've had to have notarized, something that has taken you more time and more involvement to create.

With a will, it's simply, what was your state of mind at the moment that you signed on the dotted line. That can be very hard to prove and therefore wills tend to be easier to contest.

This is one of the many reasons why you need both a will and a trust.

If we own in joint tenancy do we still need a Trust?

Yes, you still need a trust.

Putting your name on as a joint tenant does not give you any way to manage the asset on your own. Say you own a home in joint tenancy with your mom and she becomes incapacitated, and you need to sell the home to help pay for her care. You cannot sell it as a joint tenant because you would still need your mom’s signature as well.

Also, if you have an accident and you receive a financial judgement against you, the judgement creditor can come and take the assets that are held in joint tenancy.

It is a dangerous way to hold assets.

If I have a Will, why do I need anything else?

Here are the main reasons why a will alone is not enough.


    • A will goes into effect only when you die. If you are merely incapacitated, a will won’t help you one bit.

    • When you die with only a will, it does not make it easy to pass assets to your heirs. A will must be authenticated by a judge before it is considered valid. This happens via a court procedure called probate. The probate process takes time and money.

So, in addition to a will, you need a revocable trust with an incapacity clause to better protect your family. Of all the must-have documents, a living revocable trust is the most powerful. If set up correctly, it can take care of everything that your will doesn’t cover. Plus, it will save your loved ones the headache and cost of going through probate.

If I have a Trust, why do I need anything else?

Having a trust in place is a great start

However, to not have all four of your Must Have Documents in place is like building a house without a roof. For all the love you have for your family, you are still leaving yourself and your family exposed.

Without all four of these legal documents in place, as you age, your family will have a hard time if they need to step in and handle your financial affairs and help you navigate your health care. The Must Have Documents are also the only way to make it as easy and fast as possible for your family to settle your financial affairs—and pass along any inheritances—once you pass. And it is especially imperative to have a will in place if you have minor children, since that is where you designate their guardian. You cannot do that within a trust.

FREQUENTLY ASKED QUESTIONS:

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Living Revocable Trust

Durable Power of Attorney for Health Care

Financial Power of Attorney

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