A Suze Orman exclusive

Don't Fall for the Lawyer's Will Power
Now I can bet the following is going to happen to a lot of you: After reading this article you'll head off to an estate attorney and tell her I convinced you to get a revocable trust. And then the lawyer will look at you like you're crazy and tell you all the money you can save by simply creating a will.

Stop her right there. Ask for a piece of stationery - with the company letterhead. Have the lawyer write down the fee for writing the will as well as an estimate of all the legal and probate fees that would be charged to settle the will if you were to die today. Then have the lawyer write down the cost of writing and funding the living revocable trust. Compare those costs, my friends, and then you make the decision. If you do decide to go with the will, I suggest you let the lawyer know you intend to share this piece of paper with your beneficiaries - and that you expect the actual fees to be consistent with these estimates as long as there are no great changes in the value of your estate.

But the best advice in most cases is to be firm and stick with the revocable trust. Yes, if you opt for the trust it can cost 10 to 20 times more than the fee for writing a will, but do you want to save money for yourself now and then end up costing your family thousands of dollars in fees after you pass?

An estate attorney should be able to draw up a revocable trust document for about $1,000 to $2,500. Or you might consider using a software program that helps you write the document yourself, then have a lawyer merely review the document for $200 or so. But either way make sure you work with someone who specializes in trusts. You want a specialist, not a hack who doesn't know the ins and outs of trust law.

The real value of a good estate attorney is not in the creation of the trust, it's in the time and expertise they share with you to explain the document. Read What a Good Lawyer Should Deliver before you sit down with one.

A Will is Useless Until You Die
Okay, I realize there are some of you out there who don't care to worry about what the family has to go through after you die; all you know is that you don't want to spend your good money today to create the more expensive trust.

But let's leave your heirs out of it for a moment. I want you to think a little about what you may be doing to yourself. A will only kicks into action after you die. If you get sick or are in an accident and can no longer take care of yourself financially, a will does you absolutely no good. But with a trust, you can make sure your financial affairs are taken care of if you suddenly become too ill to handle things on your own.

Now don't tell me could never be too sick to take care of your family's financial life. Like you've never heard of anyone having a car wreck, or even a bike or rollerblading accident, and ending up with brain damage. Or what about a stroke, a coma, Alzheimer's, Parkinsons? Sorry to be so dark, but you can't tell me that any of those are outside the realm of possibility.

And if an incapacitating illness or disease does strike, how are you going to take care of your finances? Who is going to look after your money and make important financial decisions on your behalf?

A revocable trust can solve this problem. All you need to do is make sure when your revocable trust is drawn up it includes what is known as an incapacity clause. That clause will designate someone you pick as a "successor trustee," who can step in for you if you become unable to handle things on your own. Just make sure your successor trustee is someone you know and love who can truly act on your behalf. I am not a fan of boilerplate trust documents that say that your wishes will be carried out when two doctors are in agreement about your situation. Come on. Don't you want someone who knows you to have the final say, not two doctors who are probably going to have a hard time agreeing anyway?

And don't think that a power of attorney (where you give the right for someone to sign for your financial affairs) is a way to do an end-run around the problem. Most powers of attorney become null and void when you become incapacitated. Besides, getting financial institutions to honor these documents can be a major hassle. If you want to maintain true power over your money, a good revocable trust with an incapacity clause is the way to go.