You are here:

Trusts & Estates Law/will? trust? marriage?

Advertisement


Question
Hello Mr. Fritzler and thank you for taking my question.

My boyfriend and I want to ensure that in the event of death, each would get the other's assets (not much, we each are still paying for our modest homes but each has about $20,000 maybe more paid off) and I have about $15,000 saved up, he has no savings. I would marry but my concern there is if he gets sick (he's been smoking since age 10 and is now 48) my savings would be gone.

I am wondering which would be better for us, a will or a trust? And, whether any would be possible without a lawyer. We're in NY if that makes a difference.

Thanks!

Answer
You don't need a lawyer.

Even if you use a lawyer you still need to understand what you are doing, since you will have to be the ones to manage this and adjust it as time goes on.

There is no one size fits all solution. and every decision has some compromise.

So let's look at options.

But first you need to know the system.

Probate is a system to finish up the affairs of the deceased. Those affairs include paying off all debts. So if your boyfriend gets sick there won't be anything to pass to you. You are right, your assets wouldn't be taken to pay his bills.

If we are just going to look at AFTER the bills are paid. . .

A will is ONLY a list of suggestions to the probate court. The Probate court does not have to take those suggestions. They have their own set of standards. First surviving spouse if no spouse then the kids, if no kids then the parents, if no parents then. . . you get the idea. boyfriend/girlfriend are WAYYYY down the list.

A Living Trust avoids probate. It does not avoid creditors, but if the assets are in the trust then the trust rules, rule. You can have everything pass back and forth (after all the bills are paid).

In either of these marriage brings financial complications as you pointed out.

Each of you own a house, your equity in your house is an asset that will be used pay debts at your passing. Same with his. So if he gets sick there may be nothing to pass to you anyway. Neither of the above options solves that.

There is a less well promoted option. All of the above focus on the individual as an individual. And with the idea that everything is owned by you an individual.

You have $15,000 saved, if you invest it, you know that you lose a large portion of the profit to taxes.

If we shifted the assets to a corporation that does not die, then each of you can manage it with or without the other person.

Call me if that sounds interesting.

Richard Fritzler  

Trusts & Estates Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Richard Fritzler

Expertise

Comparing the advantages and requirements of traditional estate practices, and unconventional methods? Are Trusts a viable asset protection vehicle? Is there an alternative to buying life insurance to reduce the impact of the estate tax. Is the elimination of the estate tax during the next decade good for everyone? I can review the benefits and misinformation that exists.

Experience

I have been in the business of assisting business owners in reducing their taxes and liability for over 17 years. We specialize in developing plans that eliminate the estate tax, not find a way to prepay it. Most small businesses do not survive the death of the principal. We want small businesses to not only survive, but flourish.

Organizations
National Small Business Owners Association.
Nevada Association of Listed Resident Agents.
Citizens Legal Association

Publications
Contributing author to "The Corporate Standard Newsletter".

©2016 About.com. All rights reserved.