Living trusts are touted as a solution to the cost and time associated with the process of probate. As a recent article explains, however, living trusts are often sold to individuals who do not need them. Living trusts are typically not cheap, either. Whereas a simple will generally costs around $300, an estate plan with a living trust can run an individual anywhere between $1,000 and $3,000.
Many people may not realize that they don’t need to use a trust in order to transfer assets outside of probate. Assets can transfer to a decedent’s beneficiaries upon their death via payable-on-death accounts and jointly owned property. Similarly, if a person has an account such as a pension with a designated beneficiary, the assets within the account will automatically transfer to the named beneficiary upon their death.
There are also unforeseen consequences that may arise during administration of the trust. For example, most people name themselves as the initial trustee of their trust account. If a person is married, they will typically name their spouse as the successor or joint trustee. This could become problematic, however, if both the creator of the trust as well as the spouse become incapacitated or develop dementia. In order to avoid this problem, it is advisable for people to name a second successor, should the primary successor not be able to fulfill his or her duties. If you determine that your estate needs a living trust, work closely with an estate planning attorney to make sure that your trust will not cause any of these unforeseen consequences.
