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His solution may well be a kind of pilot trust—a form of revocable living trust that is funded at his death by his life insurance proceeds and corporate benefits. Many bankers recommend splitting such a trust into two parts—a "marital trust" and a family or "non-marital trust." The surviving spouse gets the income from both trusts, while being allowed to use the principal of the marital trust if necessary. When he or she dies, federal estate taxes apply only to the nonmarital trust and only to the amount that exceeds $60,000. The principal of the nonmarital trust passes directly to the children, and both trusts escape probate.
However alluring, such plans have so many built-in problems that they obviously require skilled help as well as constant review in the light of changing assets and laws. Whatever the pros and cons of revocable living trusts, one thing is clear: don't use a do-it-yourself book—get a first-rate lawyer.