Revocable living trusts are widely used and are now part on the everyday vernacular; however, if you don’t fully understand the advantages and disadvantages of setting up a revocable living trust, you are not alone.
In a nutshell, living trust advantages include:
- Control: Using a trust permits you to stay in control during any period of disability and even after your death. Otherwise, without a trust, the courts and state law take over and you lose control.
- Probate Avoidance: A fully funded trust avoids probate, saving your family money, time, and hassle, and keeps everything private.
- Lower Overall Cost: A fully funded trust lowers over-all costs by avoiding living probate (i.e. guardianship) and death probate. A trust is often used to minimize or totally avoid the state and federal estate tax as well (for married couples.)
- Convenience: Your loved ones avoid court interference, with increased convenience and reduced hassle.
- Confidentiality: When probate is avoided, nothing is filed at the courthouse or in any other public forum. Your business stays your business.
In a nutshell, the disadvantages of setting up a revocable living trust:
- Upfront Legal Fees: The costs of setting up a living trust are more than the costs of a simple will; however, the overall lifetime and death settlement costs are much lower.
- Funding: A perceived disadvantage to a living trust is that your assets have to be funded into your trust. This takes filling out change in beneficiary forms, change in title forms, and filing real estate deeds. However, funding only has to be done once and it’s a lot easier for you to do it than your loved ones. who don’t really know what you own. They may miss assets or probate may take months or even years if you don’t have a fully funded trust.
If you’d like to discuss the advantages and disadvantages of a revocable living trust in your individual situation, consult with a qualified estate planning attorney.