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Should You Have A Will Or A Living Trust?

Should You Have A Will Or A Living Trust?

Estate planning can be confusing. You have a multitude of options for how your assets should be handled in the event of your death. While a will is a route most people take for directing their assets after death, there are times where having a living trust is more beneficial.

What is a Will?

A will is a legal document. It contains a plan regarding the distribution of your assets should you pass away. Essentially, it allows you to have some final input into how your estate should be managed, even if you cannot make the said changes yourself.

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Your will includes a designated executor. An executor is a person you select to help distribute your assets as set forth in your will. The executor has no say in regards to the management of your assets until your death. Upon your death, your estate goes through probate. During these court proceedings, your assets are distributed according to the executor’s instructions as the representative of your will.

What is a Living Trust?

A living trust is also a legal document that places all of your assets into a trust. The trust functions, with you designated as the trustee, until your death or a point where you become mentally incapacitated.

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Prior to your death, you have full rights to manage the assets held in the trust as you see fit, conversely you are not the legal owner of the items. Instead, the trust is the legal owner. You simply maintain the legal right to manage the assets that the trust owns. Instead of designating an executor to manage the distribution of your assets, you select a successor trustee to assume control of the trust should you no longer be able to manage the assets.

Which is Right for You?

To help you decide which option is right for you, there are a few considerations that need to be made. According to Steve Bliss, a probate and estate planning attorney, one benefit of using a living will is it can keep everything out of Probate Court.

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Ordinarily, your trustee successor is allowed to take immediate control of the trust should you become incapacitated, or if you pass away. This allows assets to be distributed more quickly, as court proceedings are not necessary. Nevertheless, a living trust can also help you maintain a level of privacy. As part of probate proceedings, your will is submitted to the court to open probate. At that point, your will becomes public record. This means that it can be read by anyone who requests it, allowing them to verify what you left and to whom you left it. Trust documents can only be viewed by beneficiaries or heirs, depending on the laws governing the process in each state. Accordingly, the only way the information becomes public record is if a lawsuit is filed regarding the document’s validity.

While a will only takes effect upon your death, a living trust can be enacted should you become incapable of managing the trust. Notwithstanding, this can include instances of mental illness, as well as medical conditions that render you unable to manage the assets, such as a prolonged coma. While the assets within the trust would not be distributed until your actual death, the successor trustee can take over the management of the assets immediately.

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Does Having a Living Trust Mean You Don’t Need a Will?

Whether you would need a will and a living trust depends on a few variables. For example, if you own other assets that are not put into the trust, you may want a will to manage how those are distributed upon your death.

Additionally, many states require that issues regarding the custody of any children to be addressed in a will, and not a living trust.

How to Decide

Consequently, the best option for you may be simple or you may find it challenging. When in doubt, seek out the assistance of a legal professional who specializes in the area of estate planning and probate.

Moreover, this can allow you to ask questions regarding your specific situation and determine which path works best to meet your needs.

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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