Steuer, Escovar & Coleman Co. LPA Steuer, Escovar & Coleman Co. LPA

Reasons to Consider a Living Trust

October 10, 2011

A living trust is an arrangement by which you as the grantor place property in trust and name yourself or some other person as Trustee or Co-Trustee, but reserve the right to revoke the trust so that the property can be returned to you. Generally, the trust agreement provides that upon your death the property will go to the named beneficiaries.

The most common misconceptions about trusts is that they are only beneficial to people with large amounts of money (up to $2 million or more). However, the benefits of a living trust are far more advanced and apply to everyone regardless of the size of your estate.

A trust can be broken down into three categories: 
A)    Pay Now, or Pay Later

(1) A trust automatically avoids all probate of the property;

(2) Therefore, it avoids all legal fees and expenses associated with probate, which typically cost at least $3,000 in attorney’s fees;

(3) Also, a trust in a large estate allows you to save potentially millions of dollars in estate taxes by taking advantage of statutory exceptions.

B)    Control

(1)  In my opinion, this is the most important reason for people who desire trusts. A trust allows you to control the management of your money, even after you are deceased.

(2)  A trust allows you to require that your children receive money only after they attain a certain age or a qualified goal (Say, graduation from college)

(3)  The Question you should ask yourself: How mature and ready will they be to inherit my estate? Its true that age 18 is the legal minimum age for inheriting an estate, but is your 18-year old wise enough to manage substantial wealth? Maybe he should receive assets in stages (say, one-third at age 25, another third at age 30, and the remainder at age 35)? Shall he receive a big allowance, or should he be encouraged to get a job?

C) Flexibility and Privacy

(1) A Living trust provides for property management or disbursement during your lifetime and the lifetime of your spouse;

(2) It assures uninterrupted income and access to principal for family beneficiaries;

(3) A living trust may be amended at any time during your lifetime without the rigid requirements of altering a Will. In essence, a Living Trust gives you the opportunity to implement your Estate Plan while you are still living, and make any changes you see fit.

(4) A trust also maintains privacy - nothing is printed in the newspaper as is the case when a person dies either in testate (no will) or with only a will;

(5) A trust also eliminates time delays in settling the estate - the successor trustee can immediately disburse the funds as indicated in the living trust agreement.

Contact Associate Patrick Ebner with your questions about living trusts.

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