What is my Living Estate?

A Living Estate is what we own while we are alive. All of those things that go into  your financial junk drawer: your cash, real property, vehicles, jewelery, 401K accounts, etc., are part of your living estate. Some folks don’t think their living estate amounts to much, or feel that with student loans, underwater real estate, they might actually have a negative net worth.

New parents unfortunately don’t realize their living estate could be much more than they think. One father-to-be told me: “I don’t have an estate, why do I need a trust?”

The Father-To-Be.

“Daniel, I am a father-to-be, but I don’t have much money. Do I need a trust?” You do have a lot of money. Or, to be more accurate, you can make sure that if you are taken out of your child’s life they have more than enough money to get by. You can fund your Living Estate with basic term life insurance. Very inexpensive, especially for young, healthy parents. Contact a life insurance agent, or ask me for a referral, and just find out how much a simple 15-year term life insurance policy would be. Then, if you die and your child is orphaned, there will be a pool of assets your child’s trustee can pull from for her education, medical care, etc. This will be your child’s Trust Fund.

Trust Fund?

You bet. Trust funds are just for the Mitt Romneys of the world. If you have a term life insurance policy, or assets of your own, your money will go into a trust fund for your child until he or she reaches the ages you designate. While the trust fund is active, the trustee can pull from it to pay for her education, as we mentioned above, and other purposes. Then, the principal will go to your child when you want it to. It’s popular now to have the trust fund distribute out in three stages: for example, 33% at age 21, 33% at age 25, and the balance at age 30.

But don’t think you can, or should set this up yourself. Find a San Diego estate planning attorney to help you out.

San Diego Estate Planning Attorney?

Absolutely. A San Diego estate planning attorney has the expertise to create a trust into which you will transfer your living estate. Everything remains your money, managed and accessable only by you, but on your death the trust will create a trust fund for your beneficiary (your child).