Living trusts are not for everyone.
You have decided planning for your inevitable death is important.
You are smart.
You are considering a living trust, but are not sure if you need one.
You have heard conflicting information.
After all, the attorneys at those "free-steak-dinner-retirement-seminars" are selling living trusts to avoid all of the "evils" of probate, right?
According to a recent WMUR article titled “Money Matters: Five misconceptions about trusts,” you are not alone.
Let us explore a few of these misconceptions.
Simply put, a living trust is a legal tool for managing financial assets for your benefit or for the benefit of another.
You own property and then transfer the legal ownership of this property to the trust.
The living trust is then managed by a trustee in the best interests of the beneficiary.
The trustee can be either an individual or an institution.
What are some of the common misconceptions?
Trusts are essential for saving on estate taxes.
Although this is certainly one function, it is not the only purpose a living trust can serve.
When it comes to saving on estate taxes, there are several factors.
It depends on the size of your estate as well as the type of trust you create.
The laws of each state will also impact whether a trust will be necessary in this situation.
Smaller estates do not need a trust.
Even if you are not worth millions of dollars, a living trust could still serve a very important function.
It can help keep your affairs private when your assets are distributed after your death.
A living trust can also be helpful in managing assets while you are alive and can be particularly helpful should you become incapacitated.
Because living trusts do not pass through probate, they retain privacy.
There is no flexibility in trusts.
Some trusts are inflexible.
Others are not.
If you create a "revocable" living trust, you can make partial or total modifications while you are alive.
You will also retain control.
A person should be your trustee.
You could name a friend or family member as a trustee.
But it is not a requirement.
A trustee has a lot of responsibility.
They must distribute and manage assets according to the terms of the trust.
You should designate a successor trustee in the event your first choice does not want the responsibility.
A trustee can also be an institution rather than a person.
Creditors will be powerless against a trust.
Not all trusts have this ability, especially a living trust you may yet modify or revoke.
If you require this specific trust, you will need to communicate this to your estate planning attorney.
Creating a living trust (or any variety of trust for that matter) is not a DIY project.
Work with an experienced estate planning attorney to create a trust to meet your specific goals.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: WMUR (September 14, 2017) “Money Matters: Five misconceptions about trusts”