Should you trust the living trust?

13-07-2021

A prospective client called me one day and said he needed me to write a revocable living trust for him. “Why do you need that particular document?” I asked. “Oh [insert name of TV pundit] says you must have a living trust to avoid probate “.” And why do you have to avoid succession? “I asked in response.” Because [pundit] He says that the succession is a nightmare and you should avoid it at all costs. “I asked the woman if she had ever dealt with the succession (” no “) and how many successions [TV pundit] had ever driven (none, since she is not a lawyer). I assured the caller that I had a lot of experience with probate, that it is not the “nightmare” some would make it sound, and that living trusts are not for everyone. Nonetheless, the lady was adamant about the trust, refused to listen to me explain why the trust might not be good for her, or address her legal needs, and hung up on the phone.

I don’t like to lose leads, but if you don’t at least listen with an open mind and discuss these heady legal issues with a professional who has experience in this area, then you might not be a good customer. The truth is, I would have gladly drawn up a revocable living trust for her, as she would have made more money doing that than with traditional estate planning, but before doing so, I wanted her to understand all the ramifications of using this legal tool. . She was not interested in hearing what he had to say and decided to move on. This was fine for me.

Revocable Living Trusts (RLTs) have gained superstar status in some circles in recent years as a way to avoid probate. True, they help avoid probate. yew they are configured and managed correctly. They also help avoid guardianship proceedings (more on that in a moment). But what many people don’t understand is that the living trust often creates more problems than it solves – for example, the costs of setting up the trust, transferring all assets to the trust, and continuing to maintain the trust properly for the life of the grantor. . often costs at least as much as legalization, if not more. I often say to clients, “Why should I you pay the costs of managing your estate? Why don’t you enjoy your money while you’re alive and let those costs come out of what your heirs receive later? “Because the truth is, there is no free lunch. Someone is going to pay to transfer your assets to your heirs.

Additionally, in my experience as an estate planning attorney who also manages estates, most of the revocable living trusts that I have dealt with have not led to a complete avoidance of legalization. This often occurs because, as time passes, Grantors forget to title the new assets in the trust’s name. After death, when the grantor’s family seeks my advice to liquidate the trust, there are assets that did not enter the trust and we have yet to file probate proceedings. So what problem did the trust solve?

RLTs help avoid guardianship proceedings, but there are also problems in this area. While the trust appoints a designated person to take care of the finances if the grantor can no longer make decisions, there is no day-to-day oversight of the work they are doing. The only way to enforce compliance or require proper performance is to engage in a costly litigation procedure. The guardianship procedure, on the other hand, is regularly reviewed by the court system at a lower cost.

In short, whether a revocable living trust is right for you is something you should discuss with your attorney. Keep an open mind and explore all your options with a member of your state’s Bar Association, preferably someone who regularly practices law in this area.

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