Living trust: Is it something I need, or just want?

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One of the first questions clients often ask me is, "Do I need a living trust?"

The answer is pretty simple if you want to make things go as smoothly as possible for your loved ones in the event of your disability or death.

A living trust is a substitute for a will. It is an agreement that provides instructions for the management of your assets during life and upon death.

Initially, you are the trustee and have total control. You can amend it, revoke it, put property into it, and take property out of it. Your control during life and while you are able is unlimited.

In fact, it is an alter ego of you for income tax purposes. Your social security number is on it, relative to accounts titled in it.

It is upon disability or death that the real value comes into play. Probate costs are minimized because no assets have to be listed on any inventory and appraisement with the court.

The assets that would otherwise have to be listed on inventory and appraisement will be titled in the trust. You will have already provided instructions and the law governing trusts and fiduciaries applies.

There need not be active supervision by any court. Upon your death, the assets owned by your trust instantly become vested in your successor trustee (usually, your spouse or child or children). The successor trustee, without court supervision, has the duty to carry out your wishes.

There is quite a bit involved in implementing a successful and seamless plan with trusts. All assets, including life insurance and retirement benefits, need to be looked at closely to make sure they work with your trust.

So when clients ask me if they need a living trust, it is not a necessity. There are many rules and procedures in effect for people that have a will alone.

If you have a will alone, the probate assets will all be listed and in the public record. There will be fees due the county treasurer based on the value of probate assets. Privacy will be compromised. Legal fees will cost more.

If you understand the dynamics of how a living trust can simplify the administrative burden, cost and delay that a will can create, you probably will want a trust.

A little bit of planning can make a big difference for you and your family.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. www.mwinnesq.com

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