When Is A Living Trust A Good Estate Planning Tool?

Posted by: Adair M. Buckner

The term Living Trust has become a buzzword for people looking at estate planning information online or in other resources. I have clients call frequently telling me they want a Living Trust when they really don't need one. Some of the sources of information promoting Living Trusts simply are a marketing tool to drum up business. They fail to analyze whether a Living Trust is even needed, or whether the expense involved in setting up a Living Trust is justified for the individual.   

Years ago, traveling seminars would roll into town, serving steak dinners, and selling estate planning packages with Living Trusts for everyone, at a cost of several thousand dollars. Many of those people had absolutely no reason to have a Living Trust to deal with their simple estates.

Oftentimes, this outlay of thousands of dollars was a waste of money. There are, however, times when a Living Trust is a smart estate planning tool. In these cases, a Living Trust can simplify or avoid probate, and save your family thousands of dollars.

Below are some of the reasons a Living Trust might be a good tool for your estate planning:

1. You own property in different states or many counties in Texas.

If you own real property or oil or gas interests in other states, a Living Trust is a very good tool to make it easier to transfer those interests on your death. Placing these assets in a Living Trust allows them to pass on your death without probate in the state where they are located.

If you have not placed title to real estate and oil and gas interests in other states in a Living Trust, you might be compelled to probate a Will in all the different states in which such assets exist. States other than Texas often have more complicated and expensive probate procedures. It may save your estate substantial money to place these assets in a Living Trust.

2. You need special assistance in managing your assets. 

In a Living Trust, you can name co-trustees or successor trustees, who can assist you in the management of your assets during your lifetime. This is particularly important if you become incompetent. You should designate a knowledgeable person or firm to aid you in handling the assets of the trust.

You can name a person to assist you in the management of your assets in a statutory power of attorney. Naming such a person as a trustee of your Living Trust, however, may give the person additional authority and ease of conducting your business. 

3. You want to place special conditions on a beneficiary's receipt of assets that you prefer to remain private. 

Many people have concerns that the gift to a beneficiary could be squandered if they do not place conditions on receipt of the gift. They may want to require that the beneficiary is drug-free, gainfully employed, that the beneficiary's spouse does not have control of the gift, or if money is to be used for college education, that a certain number of hours of classes and a certain grade point be maintained. They may want those conditions and issues to remain private. 

If the terms of your Will place special conditions on the receipt of the inheritance by a beneficiary, these conditions would become public record in the probate proceeding. A Living Trust is the way to impose special conditions such as these on a beneficiary and maintain the privacy desired.

4. You have a beneficiary with special needs. 

If one of your beneficiaries has special needs and is receiving government assistance, you can set up what is called a Special Needs Trust. This trust must meet specific regulatory requirements but can provide supplemental assistance, while still preserving the beneficiary's receipt of the government benefits. 

How To Decide If A Living Trust IS Right For You

My advice is that if you are thinking about a Living Trust for your estate planning, set up an appointment with a qualified estate planning attorney to fully discuss why you may or may not need one. 

  • Seek out an estate planning attorney with knowledge of the law of the state where you live.
  • Prepare a full summary of your assets to take to the attorney when you meet. 
  • Advise the attorney of any special situations in your family that might benefit from having a Living Trust.  
  • Avoid using standard forms, kits, or computer software that is one-size-fits-all.

If you live near the Amarillo area and you’re interested in discussing whether you need a Living Trust as part of your estate planning package, please contact Adair M. Buckner to schedule a free initial consultation.*

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*The free consultation does not cover the actual review of documents or giving legal advice on a specific situation.

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