A living trust is an estate-planning tool that can help simplify the passing of assets from one person to another when the owner of the assets dies. Living trusts allow heirs to receive possession of items quickly and reduce the costs and complications of managing an estate after the owner passes by avoiding the probate process. However, trusts also have a number of negatives that a person should consider before establishing a trust.
Living trusts are complicated to set up, often requiring a considerable amount of work by the person establishing the trust. The person setting up the trust must transfer ownership of all of her assets to the trust. This includes real estate, private property and other assets. Though there are instructional books and software to help a person create her own trust, most will use an attorney. Though the services of an attorney will simplify the creation of a living trust, the person setting up the trust will likely have to meet with the attorney several times. By comparison, it is far simpler to establish a will. Many people use books and software to complete a will and, if they do use an attorney, generally one meeting is sufficient.
A person should expect to spend a month or more properly setting up a living trust. Those owning considerable amounts of real estate may spend the most time completing all of the steps required to complete a trust as transferring the ownership of real estate is a time-consuming process. It may take even more time if the real estate is in different states, due to the complications of communicating with the proper courthouses to get records changed.
To establish a living trust, most people will need to hire an attorney that specializes in estate planning to complete the necessary paperwork. Though a living trust may save money for a person’s heirs who will not have to deal with as many estate costs, the person establishing the trust will have to pay the costs of the trust upfront. Trusts can have some tax advantages for heirs over a standard will, but a person can complete other estate planning steps that offer similar savings.
As a person acquires assets, these assets will need added to the trust, further adding to the complication, time and expense of establishing a trust. Failing to add assets into the trust will cause the assets to pass through probate after the owner passes away. A person wanting to change beneficiaries or simply change the allocation of assets will also need to complete changes to the trust. This will likely require an additional visit to an attorney. Though changes to a will may also require a visit to an attorney, the costs to change a will are generally less as the process is less complicated.