Which is better to have, a will or a trust, if you have young children?

Attorney Tom Olsen: Here comes a text from, I assume it's a lady, she says I'm married and my husband and I have a couple of young children. What would be appropriate for them? A Will or a Trust? We know the answer to that question and this is that, if you've got young kids then definitely you're a candidate to have a living Trust. The reason that you have a living Trust is that if both a husband and wife both passed away and the kids were young, you can't hand out their wealth to young kids. It would actually have to stay in that Trust that's created by the parents.

That money would be managed by typically, another family member and would be used to help the kids go to college, help them buy a car, help them buy a house. Then the Trust would state at what age the kids would get this money. Typically, is age 25, but it could be half at 25, half at 30, or all of it at 40, it's all up to the client. That would be a reason why they would be using a living Trust in that situation.

Attorney Chris Merrill: Exactly. Tom, another component to that is about being in charge and that it's this, when we say in charge of the money like you were describing, being in charge of the money for these young kids may be one family member and there may then be another family member that is designated to be in charge of the children day to day or guardian. I think that's so that young couples are pleasantly surprised that they didn't think about that, of course, and that's part of what we want to help guide them. Importantly, if you do not put it in writing who would be in charge, there's nothing automatic about it.

Attorney Tom Olsen: Exactly. When we're doing estate planning documents for people that have young kids, and we just talked about doing a Trust for them, but within the Will itself, we're naming who would be the guardians, who would be the parent to these children if both mom and dad passed away. That's very important that you put that in writing because otherwise, it's a free for all. We got all the, who knows who's going to come into court and petition the court to be the parent to the kids and if mom and dad had put it in writing, that's pretty much going to be gold.

Attorney Chris Merrill: Absolutely. Otherwise, it will be up to the judge to make that decision. If you do not put it in writing now, again, just because you spoke the words to somebody, that does not make it happen. It has to be in writing.

Attorney Tom Olsen: If somebody came to me and said, Hey, we want to do a Will and a Trust for our young kids and in our Will, we want to name-- the wife says, I want to name my sister, Sally, to be the guardian, the parent of our kids if we both passed away. My next question to them is, "Is Sally married?" She'll go, yes. I go, well, okay, if she's married and Sally passed away, would your children stay with her husband, your brother-in-law or would they move on to choice number two?

If they say, well, they would stay with brother-in-law, then we actually have language, it's going to be Sally and brother Bill and it says that if Sally passes away, they're going to stay with Bill but it also says if Sally and Bill get divorced, then the kids are going with Sally.

Attorney Chris Merrill: Exactly. Very important.

Attorney Tom Olsen: If people say, no, it's Sally, and if Sally passes away, no way do I want them to go to her husband, Bill, they move on to my brother, John, well then that's the way we write it.

Attorney Chris Merrill: If it's not written, it doesn't necessarily happen that way.

Attorney Tom Olsen: Folks, we're talking about a revocable living Trust. When you hear about people using Trusts out there, they're all talking about the same thing, it's a revocable living Trust. People are using it for the purpose of avoiding probate and when I say avoid probate, I really mean avoid attorney's fees. When you have young kids, you're using it for that purpose, the purpose of avoiding probate as well, you're using it for the purpose of setting up this Trust so it's ready to go if both the parents happen to pass away and any of the kids are under the age of 25 or whatever age you pick.