When Is A Living Trust A Waste Of Money
One of my biggest pet peeves over the years has been the over-selling of living trust packages to folks doing their estate planning. There are definitely times when a living trust is a good estate planning tool. However, for many individuals a living trust is an unnecessary expense.
Beware of the estate planning person who tries to sell you on a living trust without even exploring your assets and estate planning needs. Otherwise, you could end up paying a large sum for something you don't need.
So how can you determine whether you truly do need a living trust? Typically, living trusts are only needed for more complicated estates, where you own real property in different states, or privacy concerns.
Here are five signs that you do not need a living trust and drawing one up is probably a waste of money.
5 Reasons A Living Trust Might Not Be Necessary
1. Your assets are transferable without the complexity of a trust.
For the majority of people, the assets they own consist of a home, personal property, other real estate or mineral interests, and bank accounts, investment accounts, or retirement accounts.
The disposition of these assets on death usually can be taken care of easily by a simple Will, beneficiary designations, or a transfer on death or "Lady Bird Deed" (for real property). A living trust is not needed unless you have special desires for restrictions on the beneficiary's access/use of the assets-restrictions which you do not want to spell out in a Will, which must be filed of public record for probate.
An exception to this general principle, when a living trust might be a good idea, is when real estate or mineral interests are owned in different states from Texas. In this instance, a living trust holding these assets may avoid multiple probates in different states.
2. Probate is not that expensive if you have a good Will and competent counsel.
A living trust often is promoted as a way to save "all the expenses of a probate." Often the price charged for the creation of a revocable living trust, funding, transfers, and related documents will far exceed the cost of probate for a Will that was properly drawn up to provide for independent administration. The creation and funding process for a living trust usually is several thousand dollars. A simple probate generally would be about $1000.
Competent counsel will also explore with heirs whether there is any alternative to accomplish the transfer of assets desired-without the expense of a full probate. Texas allows several simplified probate procedures which might cost even less than $1000.
3. Living trusts are not needed by most individuals for estate tax planning.
Living trusts are frequently oversold as an estate tax avoidance planning tool. Unless you have an estate worth more than $11.5 million per person (the current estate tax exemption), you have no need for a living trust to avoid estate taxes! Most of us are not fortunate enough to be in that category.
Estate tax savings through complicated trust arrangements were a key reason to have a living trust in the past, when the estate tax threshold was much lower. That motivation no longer exists. These complicated former estate tax saving plans now do nothing but complicate administration of what otherwise might be a much simpler estate.
Even if you do have an estate large enough to trigger estate tax considerations, you do not always have to have a living trust to minimize estate tax liability. Gifting and other estate tax avoidance also should be explored with your attorney.
4. Your assets have been placed in joint tenancy with right of survivorship, beneficiary or payable-on-death designations.
This is a much simpler way of passing on many assets upon death rather than placing them in a living trust. We urge clients to place as many assets as they can in this form of ownership or beneficiary designation if they want them to pass immediately on their death to someone else.
Unless the beneficiaries are minors or have special needs, or you want to place restrictions on their use of or access to the funds, you really don't need a trust for these assets. Also, the state of Texas has approved a transfer on death or Lady Bird Deed form to make passage of title to real estate on death much easier. This deed even allows your beneficiaries to receive the property without probate. You definitely should explore this as an estate planning tool with your attorney.
5. Most probates of properly drawn Wills do not require a lengthy process.
Living trusts also have been promoted as a way to avoid the "lengthy probate process". This is really not a valid justification for the expense of a living trust in Texas unless there are other valid reasons to create a trust.
The Texas Estates Code continues to be modified to streamline and speed up the probate process. Rarely would lengthy delays be involved in passing on assets through probate. The usual probate of a simple estate can be concluded in a few months. Administering a living trust easily could take that long.
An independent administration under a well-drawn Will requires only one hearing and minimal court involvement in the process thereafter. A competent, conscientious executor will move the process along quickly unless there are unusual complications.
If you still feel a living trust might be right for you, please download the living trust questionnaire and contact Adair M. Buckner to discuss your situation.
If you are needing to discuss estate planning that is appropriate for you, please Contact Adair M. Buckner using the button below to schedule a free initial consultation*.
*The free consultation does not cover actual review of documents or giving legal advice on a specific situation.
When my husband passed away, I contacted the attorney that we had used to prepare our wills but was unhappy with his attitude of indifference. I discovered Adair Buckner and all of my issues were resolved. Adair is professional, compassionate, and extremely knowledgeable. She saved me a large amount of money by processing my will in the appropriate manner to best suit my situation.
I needed an attorney I could trust who could handle my legal concerns regarding my mother’s Living Trust. Adair Buckner firmly set things right. She was my voice when I had none and knew how to protect me in the midst of negative chaos. I recommend Adair to anyone seeking justice.
It is a great pleasure working with Adair. She is very professional and genuinely concerned about your needs. I have complete faith and trust in Adair and will always work with here for my attorney needs.
Trying to get our LLC changed over after moving to Texas was complicated, but Adair Buckner made the process so simple! We just gave her the details, and she handled everything quickly and professionally. Thank you, Adair, for making this part of our move stress-free!
It was way past time to finally get our Wills completed. This was something that was extremely complicated for us, but Adair and her assistant never made us feel like we were bothering them...and we (I) bothered them...a lot! Things were explained to us in a way that we could understand easily. Extremely professional and knows her stuff!
Adair is our employment attorney at ROI Online. She is an excellent resource to turn to as we grow and add employees. Adair is not only extremely knowledgeable in her area of employment expertise, but she is also very accessible and quickly responds to our questions and requests.
We appreciate Adair Buckner’s professional and personable service. Our legal needs were met promptly and succinctly. We would not hesitate (and do!) recommend her to our family and friends.
Adair was very helpful in guiding us through this process of creating our estate planning! She and her assistant were friendly to us each time we met them in their office. I would highly recommend Adair Buckner as an attorney of choice!