Today I met a client whose estate was not terribly large. He had about $500,000 in life insurance and a 401k worth about $80,000. These are both assets that generally pass by way of designated beneficiary. He had listed his wife as primary beneficiary on both the life insurance and 401k. He listed his 12 year old child as his secondary beneficiary on both of these assets.
He was of the opinion that he and his wife would be best served with simple will. However, they had a minor child who was only 12 years old. I explained to him that even though his estate wasn't huge, a living trust might be a wiser choice if protecting his daughter was indeed a priority as he had indicated to me during the meeting. Money flowing to the living trust, even by naming the trust as the beneficiary of certain assets, would be better protected for his daughter.
Without using the protective mechanisms available from a living trust, his daughter would have easy access to the money. A trust could shelter the funds, making the funds available for certain purposes and ages.
In this particular case, he had approximately $600,000 between life-insurance and a 401(k). Otherwise, he and his wife did not have much more. Therefore, I told him that if he had living trust, he could make his 401(k) payable to his wife followed by his trust. I also told him that he could make his life insurance money payable to his living trust as well. A simple will wasn't going to do much good since both of his major assets would pass by way of designated beneficiary. A will doesn't control any assets made payable to a beneficiary.
If you'd like to discuss your estate plan, please call our office at (661) 414-7100.