WHY A LIVING TRUST?
by: Begley Law Group
by Thomas D. Begley, Jr., Esquire, CELA
A revocable Living Trust is designed to avoid probate on the death of the individual. If the individual owns real estate in more than one state, the real estate can be transferred to a Living Trust to avoid probate in multiple states. Some states have very difficult and expensive probate procedures, and a Living Trust can be used to avoid the process entirely. In these cases, the Will simply leaves everything to the Trust, and the Trust spells out to whom the assets are to be distributed. The Trust can be funded during the individual’s lifetime. A Trustee is appointed to administer the Trust. During the lifetime of the individual establishing the Trust, the individual is his own Trustee. Provision should be made for a Successor Trustee in the event of the disability of the individual establishing the Trust. The Trust can be revocable during the lifetime of the person establishing it. Tax planning can be done in the Trust document. The Trust could be designed to save federal or state estate taxes. The advantages of a Revocable Living Trust are as follows:
- Avoids probate;
- Saves Executor’s commissions;
- Reduces, but does not eliminate, attorney’s fees;
- Often ensures greater privacy;
- Provides disability protection, if the person establishing the Trust becomes disabled; and
- Provides for asset management during disability.
While Living Trusts are often oversold, they do have some benefits and should always be considered where the individual owns out-of-state real estate. Without the Living Trust, the individual would have to probate his Will in the state of residence and again where the out-of-state real estate is located. Care must be taken to be sure that beneficiary designations and the Living Trust work together to achieve the individual’s estate planning goals.