The Pros and Cons of Living Trusts
A living trust as an estate planning vehicle that provides a number of different benefits, but this type of trust would not be the ideal choice under certain circumstances. We will look at the details in this blog post.
In a general sense, a living trust can be a good choice for you if you have always been under the impression that you should use a last will, because your objectives are relatively simple and straightforward.
A will would be admitted to probate, and the trust administration process would be supervised by the probate court. The people that you were leaving inheritances to would not receive anything during this interim. In a simple case, you are looking at a time lag of perhaps eight months to a year. Plus, in addition to the time factor, there are considerable expenses that can accumulate during probate.
If you were to use a living trust instead of a last will as the centerpiece of your estate plan, the successor trustee that you empower would be able to distribute assets to the beneficiaries in accordance with your wishes outside of probate.
Why would the trustee be a “successor” trustee? When you create a revocable living trust, you can act as the trustee while you are alive and well, so you maintain control, and of course you can revoke the trust entirely if you choose to do so.
Since you maintain that level of control, assets in a living trust would be part of your estate for estate tax purposes, so these trusts are not useful if tax efficiency is a concern for you. They do not provide asset protection, and assets in a revocable living trust would be counted if you were to apply for Medicaid to pay for long-term care.
Though a living trust will not be the solution if you want to create separation between you and your assets for one reason or another, there are irrevocable trusts that can be used for asset protection and estate tax efficiency purposes. You could also convey assets into an irrevocable Medicaid trust if you wanted to get resources out of your own name so that you could qualify for Medicaid to pay for living assistance.
Contact Our Firm
Now that you know a bit about the pros and cons of living trusts, you may want to discuss your estate planning objectives in person with a licensed professional. If you feel this way, our firm would be more than glad to help.
We offer no obligation case evaluations, and we can sit down, get to know you, and become apprised of your objectives. Ultimately, if you decide to go forward, we can help you craft a personalized estate plan that is perfect for you and your family.
To set up an appointment, contact us through this page: Dallas TX Estate Planning Attorneys.