Confused about living trusts? If so, you are not alone.
A living trust is a legal entity normally created to hold assets in your lifetime and distribute them after your death. [A living trust has nothing to do with a living will. A living will is a document that states your desires regarding use of artificial means or heroic measures if you become disabled.]
The internet is littered with so-called “experts” loudly proclaiming their opinions about living trusts.
Some “experts” say living trusts are the best thing since sliced bread. Others, say living trusts are worthless and their benefits a hoax.
The truth is much more complicated.
Living trusts can do great things for some people and nothing for others. It just depends on your situation.
It is true that a living trust can, among other things, be used to avoid probate and save estate taxes. It also can help provide privacy, flexibility and even avoid a guardianship proceeding if you become incapacitated.
One of the biggest benefits of a living trust is that it allows you to begin to put your estate plan into action while still alive. You can then get some insight into how your estate plan will work and make adjustments if necessary.
However, there are other ways to achieve these objectives that might be easier and cheaper for you. Also, it can be difficult and sometimes costly to properly prepare and fund a living trust.
So, the truth is that a living trust offers advantages and disadvantages.
Generally speaking, the larger and more complex your estate, the more a living trust will likely benefit you. Certainly if you have assets over $1,000,000 you should seriously consider having a living trust drafted as part of your estate plan.
The bottom line is to figure out if you should get a living trust you need to either talk to an experienced estate planning attorney about your particular situation or you need to invest some time learning about the advantages and disadvantages of living trusts.
Maurice Johnson is an attorney and has practiced estate planning law throughout his professional career. He is publisher of Free Living Trust Information. To find out more about the advantages and disadvantages of living trusts, visit Advantages of a Living Trust and Disadvantages of a Living Trust.
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