There are many misconceptions concerning living trusts. Due to these misconceptions, people believe that living trusts can accomplish much more than they actually can. A recent article helps readers to clear up some of these misconceptions.
One common myth concerning living trusts is that they reduce taxes. Living trusts do not actually reduce taxes because all assets within a living trust are fully taxable at both the federal and state level. In order to gain tax savings from a living trust, the trust creator must draft the trust specifically to include tax savings provisions.
Another myth concerning living trusts is that they relieve trustees of their duties. This is also not the case. A living trust does not do the work for the successor trustee. The successor trustee will have to face a myriad of duties, such as changing titles and providing for appraisals.
A final myth concerning living trusts is that they replace wills. Even if you have a good living trust, you still need a will. If you have minor children, for example, you will designate a guardian for your children through your will. Moreover, if you would like to gift certain property to family members, the best way to do this is through a will.
For more information on living trusts, contact us at (626) 696-3145.
