Q Which is better to have, a will or a living trust? The lawyer who drew up our wills felt it was better to have a will. But at a seminar here, another attorney recommended living trusts. How can we find an impartial answer?
A Both instruments have their fans, says Paula Hogan, a fee-only financial planner in Milwaukee.
To decide which is best for you, start by calling your local bar association to find out how the law treats both trusts and wills in your state.
Wills are public documents, subject to probate. Thus, they have a certain closure that trusts do not.
On the other hand, trusts are private, not published. They would cover whatever property is transferred to it.
So if you have property in several states, a trust may make the most sense, Ms. Hogan says.
Trusts may also be less costly, especially in states with fairly high probate expenses, such as California and New York.
You can, of course, have both.
But whatever you do, go through an attorney, says Hogan. Don't just go out and buy a form "trust agreement."
One excellent discussion of trusts and wills is found in "Marshall Loeb's Lifetime Financial Strategies," (Little, Brown).
Q I plan to change jobs. I have $15,000 in a company-sponsored 401(k) plan. I want to roll over the funds. My goal is to invest in a balanced mutual fund. The management fees, however, seem fairly high while the investment amount is somewhat low. Any suggestions?
A Expense ratios of most balanced funds are actually fairly low, below a typical expense ratio of 1 percent, fund experts say.
The Fidelity Balanced Fund, for example (800-544-8888) has a current expense ratio of 0.71 percent.
The T.Rowe Price Balanced Fund (800-638-5660) is 0.78.
The Vanguard Balanced Index Trust comes in at a rock-bottom 0.2 percent (800-662-7447.)
Balanced funds generally keep about half their assets in stocks and the rest in bonds. But fund managers can and often do change the mix to meet their perceptions of the market.
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