Living Trusts vs. Wills - Part 5 (final)
December 17, 2007 | 1 Comment
It seems that a lot of you have enjoyed the series on living trusts vs. wills from viewing the amount of traffic that these posts have seen. I hope that all of my subscribers will enjoy the final post in this series. Soon I’ll have the entire list up on the resources page so that you can have everything in one place and be able to go there and download the full list in word format if you’d like.
I want to add that this list isn’t a conclusive list but just some things that you should keep in mind when doing your estate planning. As an estate planning lawyer I highly believe that living trusts are among the most efficient and best estate planning instruments available. However, they are right for everyone. When making important estate planning decisions that will effect your family for decades make sure to talk to your lawyer.
Okay, with that out of the way. Here is the conclusion to the list.
Living Trusts vs. Wills - Part 5 (final)
19. Is a living trust expensive?
Not when compared to all the costs of court interference at incapacity and death. How much you pay will depend on how complicated your plan is.
20. How long does it take to get a living trust?
It should only take a few weeks to prepare the legal documents after you make the basic decisions.
21. Should I have an attorney do my trust?
Yes, but you need the right attorney. A local attorney who has considerable experience in living trusts will be able to give you valuable guidance and peace of mind that your trust is prepared properly. In some states, qualified paralegals can now also prepare trust documents; however, they cannot give you legal advice.
22. If I have a living trust, do I still need a will?
Yes, you need a “pour-over” will that acts as a safety net if you forget to transfer an asset to your trust. When you die, the will “catches” the forgotten asset and sends it into your trust. The asset may have to go through probate first, but it can then be distributed as part of your living trust plan.
23. Is a “living will” the same as a living trust?
No. A living trust is for financial affairs. A living will is for medical affairs; it lets others know how you feel about life support in terminal situations.
24. Are living trusts new?
No, they’ve been used successfully for hundreds of years.
25. Who should have a living trust?
Age, marital status and wealth don’t really matter. If you own titled assets and want your loved ones (spouse, children or parents) to avoid court interference at your death or incapacity, consider a living trust. You may also want to encourage other family members to have one so you won’t have to deal with the courts at their incapacity or death.
26. Summary of Living Trust Benefits
- Avoids probate at death, including multiple probates if you own property in other states
- Prevents court control of assets at incapacity
- Brings all your assets together under one plan
- Provides maximum privacy
- Quicker distribution of assets to beneficiaries
- Assets can remain in trust until you want beneficiaries to inherit
- Can reduce or eliminate estate taxes
- Inexpensive, easy to set up and maintain
- Can be changed or cancelled at any time
- Difficult to contest
- Prevents court control of minors’ inheritances
- Can protect dependents with special needs
- Prevents unintentional disinheriting and other problems of joint ownership
- Professional management with corporate trustee
- Peace of mind
Living Trusts vs. Wills, Part 2
November 20, 2007 | Leave a Comment
I’m continuing the series on Living Trusts versus Wills that I started last week. These are more questions that our Memphis area law firm estate planning lawyers answere frequently for our estate planning clients.
I’d love to hear your specific questions or comments that about Mississippi Law or Tennessee Law. If there is a particular topic that you would like to see covered please contact us and we’d be happy to address it.
4. Is it true that joint ownership with rights of survivorship avoids probate?
Not always. Joint ownership can just postpones probate. With most jointly owned assets, when one owner dies, full ownership does transfer to the surviving owner without probate. But if that owner dies without adding a new joint owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.
Be on the lookout for other problems though. For example, when you add a co-owner, you lose some control. Your chances of being named in a lawsuit and of losing the asset to a creditor are dramatically increased, even if you have done nothing yourself. There could be gift and/or income tax problems. And since a will does not control most jointly owned assets, you could end up accidentally disinheriting your family.
With some assets, particularly real estate, all owners must sign legal documents to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new “co-owner” — the court–even if the incapacitated owner is your spouse.
5. Why would the court get involved if someone is incapacitated?
If you can’t conduct normal business due to some type of mental or physical incapacity (Alzheimer’s, stroke, heart attack, etc.), only someone appointed by the court can sign for you - even if you have a will. (Remember, a will only becomes effective after you die.)
The court can be like a dreaded disease. Once it gets involved, it usually stays involved until you either recover or die. The court and it’s appointee, not your family, controls how your assets are used to care for you. This public process can be expensive, embarrassing, time consuming and difficult to end if you recover. Worse yet this process does not replace probate at death - by just having a will (or worse nothing at all) your family could have to go through the court system twice!
6. Does a durable power of attorney prevent the court’s involvement if you become incapacitated?
A durable power of attorney is a document that appoints someone and gives them the authority to manage your financial affairs if you are unable to do so. A major probelm here in Memphis and in Mississippi however that we lawyers come across is that many financial institutions will not honor one unless it is on their form. And, if accepted, it may work too well — giving someone a “blank check” to do whatever he/she wants with your assets. A durable power of attorney can be very effective when used with a living trust, but risky when used alone.
