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Congress recently extended $8000 First-Time Homeowner's Tax Credit by another five months.

Congress recently extended the $8,000 First-Time Homeowner's Tax Credit by another five months.

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Updated: May 3, 2013 12:15PM

Q. Do I need a will if I put everything I own (which isn't much) into "joint name" with my spouse, and we're only in our 40s?

A. The answer is a simple YES. You do need a will -- or better yet, a revocable living trust -- so your relatives aren't left fighting over your assets, or the care of your children, should you and your spouse die unexpectedly.

Wills and "estate plans" are in the headlines these days with the death of Michael Jackson. And his estate planning demonstrates why you need to do more than write a simple will.

Most commentators don't understand that Jackson's will was probably a well-thought-out document. It contained only what is minimally required of a will, which explains why it was only five pages long. And only the will must go through the public process of probate, which allowed fans to see his intentions.

But the critical information was most likely hidden inside a living trust -- the Jackson Family Trust -- which contained all of his instructions for disbursing his wealth, and the name of his successor trustee who is empowered to handle that process. So maybe Michael's father, Joe, did inherit some money. The public will never know for sure.

Michael Jackson's will dealt publicly only with issues required of a will -- including custody of his children, specific provisions to exclude an inheritor (in his case, his ex-wife Deborah Rowe), the naming of executors, and the transfer of any assets not already named in the living trust into the trust.

That last part will be problematic. If there are claims against Jackson's estate, only the assets remaining outside of the trust will be an easy target for creditors' claims -- unless the living trust had a provision calling for it to repay his personal debts. Since Jackson had good legal advice, it is certain that he retitled most of his major assets in the name of his living trust. That would likely include the ownership of real property, and probably the ownership of valuable items such as his share of the Beatles songbook.

If these assets were owned by the trust, and not by him personally, it will be harder for creditors to attach them to repay his personal debts. Once the grantor of the trust dies, the successor trustee takes over. The trust is now considered an irrevocable trust. Assuming that major assets were retitled in the name of the trust when it was created, or when they were purchased, the successor trustee has the responsibility of distributing them per the grantor's instructions.

One additional benefit of the trust, according to estate planning attorney Mark Bischoff of Chicago, is that it gives an added degree of protection from creditors. While he does not know the specifics of the Michael Jackson Family Trust, and the protection would also depend on the law of the state where the trust was created and administered, Bischoff says: "Attacking a trust may be problematic for Mr. Jackson's creditors. If he incurred his reputed substantial debt as an individual, but maintained most of his assets within his living trust, after his death the creditors may not be able to reach those assets. Also, the timing of placing the assets in the trust will be important in determining whether they are protected from creditors."

Jackson is reported to have completely lost his interest in Neverland Ranch after the note was purchased from his lenders. And some of his assets may have been liened by creditors before his death. Those will be fair game. But it's also possible that royalties will flow into this trust as a result of income earned after his death.

Bischoff specializes in not only creating these trusts as part of estate plans, but also in litigating estate and trust disputes. He says: "Many clients put a 'no-contest' clause in the trust, so that if an individual contests the trust, that individual will lose any benefits from the trust." That portion of the law is still evolving, he notes. But he adds that disputing the terms of a trust is more complex than contesting the actual will.

And all of that brings us back to the importance of having an estate plan. Simply having assets in joint tenancy isn't the answer -- especially if one owner is incapacitated, or if both die in an accident. In that case, state law would make decisions about distribution of your assets, and custody of your children.

A simple will can take time to go through probate, and incur costly legal fees. That's why it's important to create a revocable living trust as part of your "estate plan." In it, you can name a successor trustee to act on your instructions. Having such a trust will keep your assets, and your instructions, private.

A well-done plan can save money, time and public exposure. In fact, his well-done estate plan may be the only privacy Michael Jackson had in life, or in death. And that's The Savage Truth.HOW YOU CAN PICK TERRY'S BRAIN

To celebrate the 20th anniversary of my Chicago Sun-Times column, I'll be responding to your most frequently asked questions on a regular basis. Of course, you always can submit individual questions on my Sun-Times blog reached on the home page at

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