Am I Too Young For a Trust?

A young couple and their baby sitting beside t...

Even young couples with long life expectancies may benefit from a living trust.

This post was prompted by a question a good friend asked me.  He is in his mid-30’s with a wife, two kids, a house, and a modest retirement account.  My friend asked me if it was true that for anyone who owns a house, it’s automatically worth it to have a living trust.  This sort of statement is generally repeated by estate planners and in the estate planning literature, but my friend’s question made me think little harder.  At that moment my friend seemed so young and I wondered if, in fact, he could be so young that a living trust wasn’t really worth the cost.   So I did some – very rough – calculations and came up with an answer that surprised me.

A Google search for median home values in Santa Clara and San Mateo Counties indicates that they are currently around $600,000 – $700,000.  (Remember that the cost of probate depends on the value of the house, not the amount of equity you have in the house.)  So, the cost of probating that median house would be about $34,500, including attorney and executor fees and court fees.  Even if we estimate that a living trusts costs $2,000 to set up, spending $2,000 to save $34,500 sounds like a pretty good deal, right?

But there is a time value associated with money.  My friend and his wife each still have a life expectancy of 49 more years.  They might not live that long, but then again they might live longer.  Should they spend $2,000 to create a living trust which may or may not save them on probate fees in the next 50 years?  From this perspective, setting up a living trust is a bit like buying an insurance policy.  We commonly pay several hundred dollars a year for insurance on our houses, even though we don’t really expect that they will burn to the ground or be swept away in a flood.  In contrast, even the youngest of us will certainly someday face death so, from that perspective, the cost of a living trust is more likely to have value than the cost of insuring our homes.

And, in comparison, a living trust may be a relatively cost-effective form of insurance.  Given my friend’s age and gender, a life insurance policy to cover the estimated $34,500 cost of probate could run him somewhere in the neighborhood of $300-$400 per year.  So if my friend lives for seven more years, a living trust would be less expensive than life insurance to cover the costs of probating the median home.  And, in the meantime, his trust would still provide for someone to manage money for his minor children if he and his wife were to die.  And the trust would still provide a way for someone to manage his assets for him if he were to be incapacitated by an accident or an illness.  And a trust could also save his heirs from having to go to court and wait for up to one year for the probate process to complete.

So where does that leave us on the answer to my original question, whether it’s worth it for a young couple to establish a living trust?  Like many questions in life, the answer is, “it depends.”  It depends on whether they have children or own a house.  It depends on their health and on the riskiness of their occupations and hobbies.  And it depends on the amount of their assets and their tolerance for risk.

For help deciding whether a living trust is worthwhile for you – or for help setting up your living trust – contact or see

Helping plan for your family’s future at every stage of your life.

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