Any estate planning tool available carries with it certain benefits and certain drawbacks. Living trusts have some very substantial potential benefits and also, as do all estate planning tools, carry some disadvantages in some situations, too. The key to choosing the right tools to include in your plan is looking at what plusses and minuses each option offers and the comparing them to your needs and goals. The same plan that might be right for one person might be very wrong for another. With the help of your knowledgeable estate planning attorney, you can put together a plan that makes the most sense for you.
In any decision in life, each option carries with it certain benefits and certain disadvantages. Estate planning works like this. There several options for planning your estate. One avenue – the use of a revocable living trust – has some clear potential benefits. It also, like anything else, has possible drawbacks.
The key to making a wise decision is looking at those “plusses” and “minuses” and matching them to your needs. Find a choice that contains the largest number of the things you greatly desire or demand, while also containing the fewest negatives that are “dealbreakers” for you and you have likely found a good option.
A properly drafted, executed and funded living trust will allow you to avoid probate administration. This can be a big benefit to you and your family because probate administration can be costly, stressful and time-consuming. If helping your family to avoid these costs and delays after your death is important to you, then a living trust may help.
Another potential advantage is privacy. Probate administration is, in most situations, a matter of public record. Settling a trust upon the creator’s death generally is not a process that is public record. If you go through probate, the contents of your estate are generally available to be viewed by anyone who goes to the court clerk and requests your file. For some people, this may not be important to them. If you are a widower, who was married once, has three living children of that marriage and owns only a $90,000 house, a $3,000 car and a couple thousand dollars in checking and saving, you sincerely may not care who sees your probate paperwork after you’re gone. However, for a lot of people, whether it’s personal details or it’s financial information, there are very important reasons for keeping information shielded from the public. If you fit that description, a living truest may provide essential value to you.
A living trust can be helpful to you if become mentally incapacitated. If that happens and you have a properly established and funded living trust, the management of your wealth generally will transition seamlessly from you to the successor trustee your named in the trust document. If you don’t care about who manages your wealth when you cannot (and do not care if your family has to go to court to get a court-appointed conservator to manage your assets,) then this may not be a big benefit. If these are concerns and addressing them are among your planning goals, then a living trust may be worthwhile for you.
As with anything, there are possible drawbacks. A living trust often costs more to set up initially. A living trust can also take more time to set up when you factor in trust funding. For a few people, this greater up-front expense or time commitment potentially could make this option impossible, However, for a lot people, this investment of time and up-front money has the potential to save them and their loved ones much greater amounts of time and money down the road.