EP-Article on Living Trusts by jdw20122

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									            What People Don't Tell You About Living Trusts
                                  What is a living trust?
A trust is a legal way of holding, managing and distributing property. All trusts must have
four elements:
   1. There must be someone who creates the trust, who is called the "trustor" or the
      "grantor."
   2. There must be assets, usually called the trust "corpus."
   3. There must be someone who holds, manages, and distributes the assets, who is
      called the "trustee."
   4. The trust must have a purpose. The person for whose benefit the trust is created is
      called the "beneficiary."
A living trust is revocable. That means that even though the trustor transfers assets to a
living trust, the trustor can get his or her property back by revoking the trust. In most
living trusts created in the United States, the trustor, trustee, and beneficiary are all the
same person.
                           Why do people create living trusts?
In many areas of the country, selling living trusts is big business. Living trusts
salespeople hold seminars at motels, public libraries, community centers, and restaurants
in which they tout the benefits of living trusts. According to a study conducted by the
AARP, most persons who attend these seminars are elderly or retired.
These salespeople say that probating an estate—the court-supervised procedure for
administering the assets of a deceased person—is expensive and time-consuming and
exposes your private affairs to public view.
By creating living trusts, they say, people can avoid the time, cost and agony probate.
Living trusts also avoid conservatorships, because if you lose your competency, a trustee
is already in place to manage your trust assets for you.

And, especially, you won’t have to deal with lawyers and courts.
Most of these salespeople are honest. Few will tell you an outright lie. But there are many
things they don’t tell you about living trusts.
Here are a few things that the living trust salespeople don’t tell you about living trusts.
Some of these are things they really don’t want you to know.
                              Eleven things to think about
   1. For most estates in Georgia and in many other states, probate is no big deal. It
      goes quickly, is private for the most part, and does not cost much money.
   2. Living trusts can be and are contested, just like a will. The living trust salesperson
      who claims that a living trust can’t be contested does not know the law.
   3. Administering a living trust after your death is not cost-free. Even if probate is
      avoided, the successor trustee should usually seek help from a lawyer in making
      sure that your debts are paid, all of the necessary tax forms filed, and the assets in
      your trust legally distributed to your beneficiaries.
   4. After your death, your living trust will not cut off the claims of your creditors
      against the trust corpus. For that reason, the successor trustee will often open a
      probate estate anyway, to require your creditors to file claims within the time
      required by law or be barred from collecting their claims against your estate.
   5. Probate can often be avoided without using a living trust, by setting up “payable
      on death” accounts, making beneficiary designations, holding assets jointly, etc.
   6. In many instances, the trustor has failed to transfer all of his "probate assets" to his
      living trust. Consequently, when the trustor dies, this probate asset becomes
      subject to probate. His estate winds up in probate court anyway. So the trustor
      pays twice: first, to set up his living trust intending to avoid probate; and second,
      after his death, to go to probate court.
   7. Living trusts do not protect your assets from creditors and lawsuits.
   8. Living trusts are no more effective than wills in saving state and federal estate
      taxes.
   9. Living trusts can adversely affect your eligibility for Medicaid nursing home
      benefits.
   10. Some salespeople sell living trusts so they can learn what assets you own. These
       people will try to sell you an annuity or other financial product. They actually sell
       financial products for a living, not living trusts.
   11. Living trusts are not for everyone.
                       When Should You Have a Living Trust?
Not all living trusts are scams. They are useful and important tools in estate and tax
planning, when used wisely and considerately.
The most important reasons for having a living trust include:
   1. You own property in another state.
   2. You are concerned that you might become disabled and that, as a result, you will
      be subject to undue influence.
   3. You want to create other trusts inside your living trust that do not require court
      supervision.
   4. Beneficiaries of your estate are disabled.
   5. You live or spend a significant amount of time in a state in which probate is time-
      consuming, burdensome, and costly.
   6. You or your spouse is in a second marriage with children from a previous
      marriage.
                                       Lessons
   1. Question what you are told about living trusts. Salespeople are trying to make
      money by selling you a living trust.
   2. Beware the salesperson who tries to sell you financial products in addition to a
      living trust.
Consult an attorney familiar with estate planning or elder law to determine whether a
living trust is best for your circumstances.

								
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