A Living Trust May Be the Answer
Many people are becoming more interested in living trusts for a number of reasons. A living trust can accomplish some useful benefits:
- Eliminate the cost of probate;
- Allow for privacy of family financial matters at death;
- Facilitate management of property; and
- Eliminate the necessity of a court-appointed guardian of a person’s estate.
How does a living trust work?
In a simplified example, Jones first writes his trust document. Then, he transfers his property to a trustee (which may be himself). The trust document says the property will be used for Jones’s own benefit during his life. The document also says that Smith will become the trustee when Jones dies and will transfer all the trust property to Jones’s children or to another trust for the benefit of Jones’s children. Jones would include language in the trust allowing Jones to change the trust, or even terminate it, while Jones is still living.
In the example, Jones would have complete use of his property for his life and his property would be transferred to his children at his death. No probate is necessary when Jones dies.
A living trust can accomplish these ends and more. However, there are costs to be considered, including the expense of setting up the trust, the transfer of assets into the trust, the management expenses if a professional trustee is employed, and the cost of additional record-keeping. In some cases, there may be simpler ways to accomplish the same goals.
A living trust is only one part of a person’s estate plan. An individual should also consider a will, community property agreement, durable power of attorney, living will, and possibly other instruments. Some of these may not be necessary, but they all should be discussed with a competent advisor to determine the best estate plan for each individual’s unique circumstances.
This information is general in nature and should not be relied upon for your specific circumstances. For information, questions, or comments, please contact Douglas J. Engel or Kathryn S. Kumar.