Tuesday, 29 September 2009 16:06
There is a lot of conflicting information about living trusts. Some experts say you must have one to keep your estate out of probate court. Other experts say there is no benefit whatsoever to having a living trust. I did a little research and will try to list some advantages and disadvantages of living trusts so you can consider what is best for you.
Avoid Probate - A living trust will keep your estate out of probate, which will save your time and money for the heirs of your estate. When someone dies with only a will, their entire estate could be tied up for years in probate.
Begin Implementation of Estate Plan While Alive – After you move assets into your estate plan, you can see it beginning to work immediately. This gives you the opportunity to change things around and make any adjustments to help ensure that your estate is running the way you intended.
Flexibility – A living trust can be amended by you at any time with very little red tape. Changing a will typically requires many formalities, such as rewriting and revalidating the will.
Cost – The upfront cost of setting up a living trust is its biggest disadvantage. In order to take full advantage of the benefits of a living trust, it needs to be funded while you are still alive.
Property Must Be Put Into the Trust – All assets in the trust must be taken out of your name and retitled to the name of the trust.
Time – It takes more time to set up and manage a living trust than to prepare a will.
Living trusts are most beneficial to people with significant assets. People without significant assets or who have simple estate plans would not benefit from having a living trust. It is good to be informed of the advantages and disadvantages of a living trust so that you can make the best decision for your situation.