Is a Living Trust Right for You?

Posted at 8:09 PM, Apr. 25, 2007

I currently have a listing which is in escrow.  During the listing period, just before the offer came in, the seller passed away.  The son started the probate process and the last few weeks have been a waiting period.  Probate can take months depending on the estate and circumstances.  It's a hard enough time for a person to lose a parent but then to have to deal with the issues of probate while still in the grieving process makes it that much harder.  Putting everything in trust for your children (grown or small) will make life much easier for them.  See your financial planner or attorney to determine if this might be right for you.

A revocable living trust (RLT) is a written plan managing and distributing your estate upon your death. The agreement is "living" because you create it while you're alive. It is "revocable" so you can change it or abolish it at any time. The "trust" names a person (trustee) or persons to be responsible for the distribution of your property. Laws governing revocable living trusts can differ in each state.

A RLT can require considerable paperwork and can be expensive, depending on the value and complexity of your assets. You can create an RLT online, at home using special software, or by visiting an attorney or financial planner.

Here's some additional information to help you decide if an RLT is right for you:

• To take advantage of the benefits of a living trust, you must transfer property into the trust.
• An RLT can save you money. In most states, it avoids probate proceedings, even if you own property in more than one state. Probate can cost 10% of your estate value and take three years to complete.
• Upon your death or if you become incapacitated, an RLT can immediately transfer estate management without court proceedings.
• A guardian for your children cannot be appointed via an RLT; however, a separate will can be used to assign guardianship.
• An RLT lets you dole out assets to beneficiaries. For example, guardianship typically ends when a minor reaches 18 (in some states up to 21) years. Most parents don't feel comfortable with their minors having access to, say, a $500,000 insurance policy check at age 18. An RLT allows such funds to be held by the trustee and disbursed as needed or instructed.

Speak to your attorney or financial advisor for more information about revocable living trusts.