Maybe you have only thought about estate planning, but have yet to put a plan in place. Maybe you have put an estate plan in place, but need to review and update it. Whatever stage in the estate planning process you may find yourself in, it is always a good thing to remain informed on your estate planning options and verify that your estate plan best protects your interests and your goals for your future and that of your loved ones. Have you considered a living trust as part of your estate plan? There are a number of significant benefits offered by a living trust. We will go over some of them here. And, to keep things balanced, we will also go over some of the potential drawbacks of a living trust.
The Benefits and Drawbacks of a Living Trust
To establish a living trust, you, the “trustor,” will create the trust and appoint a trustee to manage the trust for the benefit of the trust beneficiaries. In many cases, a trustor opts to be the trustee of the living trust for their lifetime and names a successor trustee to manage the trust once the trustor passes away. The trust must also be properly funded which will involve transferring assets into the ownership of the trust.
This overview of the living trust formation process brings us to the first downside of establishing a trust. There will be paperwork involved, probably more so than may be required of using other estate planning tools. Ownership of property you want to hold in the trust must be legally transferred to the trust. This drawback of a living trust is not too burdensome, all things considered. It is also easily viewed as being clearly outweighed by the benefits offered by a living trust.
The first benefit we want to mention is probably one of the most prominent reasons why people establish living trusts in the first place. A properly established and funded living trust will avoid probate proceedings. Why does this matter? Well, for starters, probate is notoriously expensive as court fees and costs, as well as legal fees, can quickly add up. Furthermore, the probate process involves a number of time-consuming steps. This is not only frustrating to wade through, but it also presents serious delays in beneficiaries receiving their inheritances. Furthermore, probate proceedings become a matter of public record. As such, little privacy is afforded to it.
Having a living trust in place can also help avoid the need for a conservatorship to be established. Should the trustor have passed significant assets into the trust and named a trustee or successor trustee other than themselves, there is already a structure in place for managing much of their property and financial issues. Because these things are already provided for, there may be no need to establish a conservatorship, which can be a very restricted, court-supervised arrangement for an incapacitated individual’s financial matters to be managed by a court-appointed representative.
To be upfront about what is involved in a living trust, you will also need to have accurate records maintained regarding trust property transfers. Whenever property is transferred into or out of the trust, accurate, written records must reflect this. While some may view this as a drawback, it is a minor one. The benefits of a living trust can easily be viewed as far outweighing the logistical burdens it demands.
Pittsburgh Estate Planning Attorneys
Want to learn more about living trusts and whether a living trust would make a valuable addition to your estate plan? Talk to the knowledgeable team at Jones, Gregg, Creehan & Gerace. Contact us today.