Use a living trust if you have children under the age of 25 years old.

A revocable living trust is the proper estate planning tool if you have children under the age of 25 years old.

Attorney Tom Olsen: Chrissy, we're all about helping people to avoid probate, and often we're using simple tools for that purpose. We consider a trust to be a more complicated, sometimes, a more expensive tool for avoiding probate, but a trust certainly can be the appropriate tool in some circumstances. I've used it a couple of times this week. For those situations, what we're using it for is when people have young children. When I say young children, typically under the age of 25. When people have children under the age of 25, we're still using the traditional revocable living trust. That's what people are using out there, for the purpose of avoiding probate. While using that living trust, you’re still going to get the benefit of avoiding probate, but what we're really using it for is if mom and dad passed away and any of their children happen to be under the age of 25. Rather than that child getting his or her share outright, his or her share would be held in trust, doled out to them, help them go to college, help them buy a car, help them buy a house over the successor trustee’s discretion. Then they don't get that money until they reach age 25.

Attorney Chris Merrill: Exactly. To me, the thing that we are really grateful to help people with if they're not aware is the successor trustee, whoever they appoint, if they don't put it in writing, it's not automatic.

Attorney Tom Olsen: Exactly. When you do that kind of trust, you're going to have to choose a successor trustee. They're really going to have two jobs. Job number one, decide how to invest the money on behalf of the children; stocks, bonds, CDs, mutual funds, et cetera. Then job number two is to make the discretion and decisions on how to spend that money on the children for their health, education, support, and maintenance. People often wonder, "What does that mean?" Here's an example I give them. Let's say that mom and dad had passed away, you're the successor trustee, you're managing these children's money on their behalf, and one of them comes to you and says, "Hey, I can drive now. I'd like a new car. I'd like it to be a Corvette." Trustee can say, "Hey, a new car is a good idea, but it's going to be a Toyota instead."

We accomplish that through a revocable living trust, folks. So if you've got young children, definitely a living trust is the appropriate tool for you. By the way, one thing I want to tell you in that is that, when you sign a trust, remember this as though you have built an empty vault or an empty safe, and you must then fill it up with your assets. We're going to make sure that your trust owns your home, but for this young couple we're speaking of, most importantly, is on life insurance, IRAs, retirement accounts, that they're naming each other as primary beneficiary, and they are naming their trust as the contingent beneficiary. Not their minor children, not their best friend who's going to watch the kids, but the trust. The money goes into the trust, is managed on behalf of the children, and they get it at age 25. That's just a number and age that we use, it could be 25 or 30 or 35. These are all options that we'll go through with you when we do a trust for you.