A living trust is a legal arrangement that manages a person’s property during their lifetime and disperses it according to their wishes upon their death. A”‘grantor” transfers ownership of property to the trust and selects a trustee to manage it. The trustee may be a family member, a trust attorney, or even the grantor. Upon the disability or death of the grantor, a successor trustee will take over (if the grantor was the trustee) and distributes or manages the property according to the terms of the trust.
We address the most frequently asked questions of this popular estate planning tool, as many “fly by night” firms have been using living trusts as marketing ploys, prompting several government agencies to issue warnings.
Why would someone set up a living trust instead of just using a will to transfer the property when they pass away?
There are several powerful estate planning benefits of a living trust – the property held by a trust does not go through the probate process when the grantor dies. Not only does this save time and money on probate costs, but probate proceedings are public records which are open to viewing by anyone, but a living trust is a private, confidential document which is not a public record. There may also be tax benefits for living trusts as well as asset protection. Finally, a living trust can be used to provide for a surviving spouse or child while protecting the interest of that person from predators and creditors.
Why have there been warnings issued on living trust scams?
Living trusts can be a powerful and valuable estate planning tool, but some unscrupulouse companies often target older Americans, in particular, with promises such as living trusts are for everyone. Such companies target the concerns of the elderly that their estates will be subject to a long, expensive probate process, and these firms often misrepresent the costs and benefits of trusts versus wills. Although many trusts are simple, a trust can also be a complex legal arrangement, and it’s in your best interest to use a Living Trust Attorney or Estate Planning Attorney to make sure a living trust is appropriate for your estate plan.
Would I benefit from a living trust?
If you own valuable property, such as a house or a large amount of stock, using a living trust to avoid probate may save your estate time and money. On the other hand, a basic will may be enough for some estates. It’s always best to consult an estate planning attorney to complete a comprehensive estate plan, even for modest estates, as these can often benefit from having an estate plan that is specifically designed for you.