The Disadvantages of a Living Trust

A revocable living trust is a great estate planning tool with numerous benefits. However, it also comes with some disadvantages to consider when deciding if a living trust is right for you.

The main benefit of a living trust is that it avoids the time, expense, and hassle of probate after an individual’s death. While it can take several months or even years to get a probate judge to accept a deceased person’s last will and testament, a living trust can be drafted to transfer the property of the settlor or grantor immediately after their death.

Costs and Time Saving – Probate fees, administrative fees, and attorney fees can add up to 3% - 8% of an individual’s total estate value in conservative estimates. A revocable living trust can save your loved ones from the burden of these expenses, especially if you have a significant amount of assets that must be transferred to beneficiaries through probate.

Delaying Distributions – A revocable living trust allows the grantor or settlor to delay distributions of funds or property until certain criteria are met. This can be important for children that are still growing and facing unpredictable challenges or those who have special needs.

Keeping Records – While a living trust does not require the individual to maintain separate income tax records, it is still necessary for the grantor to keep accurate written records of any transfers of assets in and out of the trust. This can be a difficult task, especially for individuals who are in the habit of moving and selling their assets frequently.

Disability Protection – A revocable living trust can protect the individual from having to undergo a conservatorship, where a court-appointed representative manages the person’s financial matters in the event of an illness or injury. This feature can be particularly comforting for families in times of need.

A living trust can also help a disabled individual maintain privacy. Assets held in a living trust do not go through the process of probate after an individual’s death. They are not visible to the public, which can be helpful for those who want to preserve their personal privacy or those with complex family dynamics.

Not Protecting Against Creditors – While a living trust can protect assets from being used by creditors, it cannot prevent them from being used. In fact, in many cases, a revocable living trust is not enough to prevent an individual from having to pay their creditors after death.

Taking Advantage of the Powers – A revocable living Trust gives the grantor or settlor a great deal of control over how their assets are managed and distributed. The grantor can name an individual or a corporate trustee to handle the assets for the purposes of the trust and to make distributions in accordance with the terms of the trust.

The grantor may also be able to appoint another individual to act as a trustee in case they are unable to do so and can specify whether or not they want that person to be a co-trustee or successor trustee for the purpose of management of the trust.

Living Trust Basics

If you are interested in setting up a living trust, there are a number of different things you should be aware of before doing so. In order to ensure that the process goes as smoothly as possible, it is important to avoid making certain mistakes while doing so.

There are many types of living trusts, and each of them is designed to accomplish a specific purpose. For example, you may want to create a trust that will protect a child who is mentally disabled. You can also create a trust that will help disabled beneficiaries qualify for federal and state benefits that they may need.

The most important thing that you should remember is that no matter what type of trust you choose, you need to ensure that it is set up properly. This will prevent your assets from being lost or misappropriated by third parties.

It is also important to ensure that the trust document contains valid and complete legal language. This is particularly crucial if you've decided to go with a DIY approach. It is also essential to ensure that the document does not contain any of the following five common errors:

Using an incorrect trust form

When creating your living trust, it’s vital to use a legal and accurate form. This will help you and your beneficiaries understand exactly what the plan is and how it will be carried out. Often, people end up with an incorrectly formed trust, or they may have their living trust modified without their consent.

Incorrectly drafting the trust will not only invalidate the trust, but it can also cause problems with your estate plan. This can include estate taxes, as well as issues with dividing your property.

You should always seek legal advice and assistance from an experienced estate planning attorney when drafting your living trust. The legal jargon can be intimidating, but with proper guidance from an experienced lawyer, you can rest assured that your living trust will be valid and effective.

The trust is not a good idea for everyone

While a living trust can be beneficial, it's not right for everyone. This is because not all estates need to be protected with a trust.

It's also not right for all family situations. This is because not all families share the same assets or have the same goals and objectives. In addition, some family circumstances are unique, such as a parent who is in a nursing home or is an only child.

A living trust can be an effective way to ensure that your loved ones are taken care of after you die. It can also help to prevent probate and other unnecessary costs and fees that can be associated with estate administration.

If you have questions about living trusts or need to create one, you should speak with an experienced living trusts lawyer. This will allow you to make the best decisions for your specific needs.

Things You Need to Know If You Create a Living Trust

A living trust allows you to transfer ownership of your assets while you are alive. This gives you the opportunity to customize your estate plan, and it can also help you avoid probate. You can also create conditions on how you want your assets used, such as requiring your grandchildren to go to college or limiting the amount of money they receive each year.

You may also use a living trust to protect your family members and other loved ones. For instance, if you have a child with special needs or disabilities, you can place their inheritance in a trust and name someone to take care of them. This will prevent the child from receiving a lump sum of money or receiving it in a manner that would be detrimental to their health and well-being.

If you’re thinking about creating trust, there are several things you need to know:

Before you start writing your living trust, gather all of the documents that prove your property. This includes deeds and titles to real property, as well as accounts and stock certificates. It is important to keep a comprehensive list of your assets so that you can easily complete your document and notarize it.

If you have a spouse, it is important to list him or her as well. Likewise, you should list any dependents, such as minor children or people with special needs.

Make sure your beneficiaries match the terms of your trust. This can be accomplished by including retirement benefits and life insurance policies as beneficiaries or by changing them to align with the terms of your trust.

You must also list the names and addresses of your successor trustees, who will assume the responsibility for managing the assets in the event you become incapacitated or die. This can be done by listing the name of a legal representative or a close friend or relative.

A trusted lawyer can walk you through the entire process and ensure no detail is overlooked. He or she will also be there to provide support and guidance along the way so that your trust is properly established and fully funded.

The legal process can be time-consuming, so you should make sure to choose an attorney who has extensive experience in trusts and estate law. You should also ask your family and friends for referrals and consult with your employer about access to legal services through your job’s benefits program.

Creating a living trust is not as simple as you may think, especially if you’re unfamiliar with the laws in your state. You should consult a knowledgeable estate planning lawyer before signing anything or transferring your assets to your trust.

Your attorney can also explain the advantages of using a living trust over a will and provide advice on whether or not this is a good option for you. In addition, an attorney can help you determine the best way to fund your trust and set up a distribution schedule that works for you.

Matus Law Group

The Matus Law Group

125 Half Mile Rd #201A, Red Bank, NJ 07701

(732) 785-4453