When you have an entry-level job and are getting by eating ramen every night, the idea of creating a will and trust can be ludicrous.
Believe or not, no matter how few assets you have, you still have an estate. To ensure your family handles your assets and wishes as you want, you need to create an estate plan based on your unique needs.
Why you need an estate plan when you’re young
While no one wants to consider their own mortality, accidents and tragedies do happen. It’s always smart to prepare for the worst and hope for the best.
If you were to die suddenly, an estate plan tells everyone your wishes and who gets your property. Without one, the state decides for you.
For example, say you promised your best friend a treasured piece of jewelry, but did not include it in a legally binding will. Without a will, there’s no guarantee she will actually get it.
The court will decide who has the best claim on it, and that usually falls to a close family member. Without written documentation, your friend has no recourse.
The difference between a living trust and will
People often combine a will and trust, but they are very different documents. You may only need a will depending on your situation, but many people benefit from having both.
A will is a written document, signed by witnesses, that explains how you want your property distributed if you pass away. They are revocable, so you can change or cancel portions of your will at any time. As you get married or purchase property, you can amend the will to cover the new changes.
Living trusts are quite different. Unlike a will, a living trust can provide guidance on how to handle things while you are still alive but incapacitated, as well as what to do after you die.
With a living trust, courts are not involved. You appoint a trustee to manage your trust for you, and they handle the distribution of your estate.
If you create a living trust, your family can avoid going to probate, a legal process that determines what happens to your assets after you’ve died. Your loved ones won’t have to wait months to get funds or valuables from your assets.
Without a living trust, the court has to sign off on your will through the probate process. The ordeal can eat up as much as five percent of your estate’s value.
If you are gravely injured, in a coma, or cannot care for yourself, a living trust allows someone else to handle your affairs. Otherwise, no one else can sign for you, even to appoint a caretaker or agree to procedures.
Having a will and trust prevents costly court fees with probate and other expenses. The process is much simpler with the documents in place and is gentler on grieving family members.
How to set up a will
Establishing a will and trust takes some time and money. You have many options when creating a will. There are will creation programs available for as little as $30, or you can do it through an online legal service for around $70.
Most people opt to work directly with a lawyer to draft their will. A skilled lawyer can walk you through the process and guide you, pointing out things you may have overlooked. This process can cost several hundred dollars, but their expertise can be invaluable.
How to set up a living trust
Living trusts are more complex than wills, making them more expensive to complete. You can create an online version for $249, which is a bargain compared to working directly with an attorney. If you hire a lawyer to create one for you, it can cost up to $1,500.
While working with a lawyer is not necessary, it’s helpful in certain situations. If you have a lot of debt, an attorney can provide advice on how to structure the trust to deal with creditors.
Additionally, if you want your gifts to family members to have conditions, such as only giving your nephew money if he goes to college, your lawyer can complete it for you.
While it’s tempting to go the do-it-yourself route to save money, your living trust is a significant investment in your well-being. It’s worth spending more to get the expertise and knowledge you need to handle your unique situation. Having an expert help you can give you peace of mind.
Create a will and trust
When you’re tight on money and building your career, the idea of spending money to create a will and trust can seem silly, but it’s a good idea to prepare for the future. Planning for the worst is not a fun concept, but it can be a significant help to your loved ones.
Start planning now for the unexpected to ensure a smoother process for your family. It’s one of the most generous gifts you can give them.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
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|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|