Some believe that living trusts are unnecessary and unduly expensive because a will and power-of-attorney will take care of your estate.
Others think living trusts offer opportunities for savings, especially of federal estate tax. Still, for most people, a will and power-of-attorney take care of things nicely. However, where estate taxes are likely to be heavy, or when property includes real estate in different states, trusts probably work better.  Whatever form you select, the important players are Uncle Louie and the Purple Barracuda. They want to screw up whatever arrangements you make.
There are many types of trusts.  Besides living trusts, many peoples' wills create trusts for children, grandchildren and elderly family members. Lawyers call trusts created by will testamentary. Sometimes, trusts include instructions about health care and education of beneficiaries.

LONG JOBS: Trustees often have big jobs. If you appoint them to look out for and educate small children, the task easily can last for 20 or 25 years. If trustees care for disabled adults, the trust may continue as long as the beneficiary's life. Still, in the debate pitting living trusts against wills, little is said about how to choose trustees.  Trustees are of two kinds. One is a trust institution, usually a bank but occasionally freestanding. These businesses manage resources according to your instructions in a will or trust instrument. The other type includes individuals, such as relatives, clergy and friends. You can also appoint an individual to serve as co-trustee with a bank. You can have as many co-trustees as you wish, although large groups can be cumbersome.  There also are a couple of kinds of trusts. One contains lots of money, but requires the trustee to do little with it. The trustee isn't paid much, but then a small percentage of lots of money is lots of money.

UNCLE LOUIE: At the other extreme, a second kind of trust supports needy people such as a nephew in a mental hospital. The trust probably will take care of the nephew for the rest of his life, making all sorts of decisions as time goes on. This business is hard for banks to run profitably.  So, when it comes to picking trustees it can be all too easy to make mistakes. Lawyers can't do anything about laws of nature. In the field of trusts, the big natural law is, "There's always an Uncle Louie."  He knows practically everything about practically everything. If you entrust only part of your estate to him -- say about half -- Uncle Louie knows about this investment in Alaskan gold mines. Within six months, your money will triple.  Actually, within a week, your money probably will be history, and Uncle Louie will be back wanting more.

SAYING NO: Bankers make good trustees because they can say "no" to Uncle Louie. They also do a good job on Purple Barracuda problems. These occur when a beneficiary has no desire to go to college, but wants a Barracuda with a 390-horsepower engine and an air cleaner sticking out of the hood. You can rely on bankers to turn down muscle cars.  In addition, you can rely on trust institutions to invest, file all the tax stuff, and handle various back-office jobs that go with trust administration.  Before selecting an institution, however, it's probably a good idea to meet with the staff and discuss things. In an era of bank consolidation, you may want to insist on dealing with someone who works in the neighborhood, rather than hundreds or thousands of miles away.  While you're at it, check out investment performance.

HONESTY AND LONGEVITY: Individual trustees need four characteristics: First is absolute honesty, and second is at least some degree of affection for beneficiaries. The job will be very hard if the trustee can't stand the beneficiaries and they can't stand him.  Third, an individual co-trustee serving with an institution must bring to the table sympathy for beneficiaries' wants and needs. This goes far to make trusts more effective. Nevertheless, when Uncle Louie turns up, the individual trustee, like the institution, needs to say no.  Finally, an individual shouldn't be too elderly. You don't want a trustee dying before the job is done.

Personally, I think individuals handle small trusts well, say several hundred thousand dollars or so. Usually, individuals save institution administrative fees, although they must frequently consult accountants and lawyers. In addition, honesty is a key factor.  Larger trusts warrant an institutional trustee, costs and all. Larger firms are accustomed to handling bigger money.

Finally, when a larger trust involves the needs of young people, older folks or disabled family members, appointment of institutional and individual co-trustees can be a good idea.

So before you become totally embroiled in the debate over wills and trusts, take a minute to think about how the whole deal will work. Always remember Uncle Louie and the Purple Barracuda.

Martin Paskind is an Albuquerque lawyer. His practice emphasizes legal services to small businesses. Questions or comments can be mailed to him in care of the Albuquerque Journal, P.O. Drawer J, Albuquerque, N.M. 87103. This column is not intended to provide legal advice to any specific person, or with respect to any particular problems or situations. Paskind's columns are available online at www.abqjournal.com/biz/pask/default.htm