Living Trusts: Frequently Asked Questions and Answers

Living Trusts questions and answersBy Rob Wiegland, Staff Writer

A living trust is an important tool in financial planning, and it is vital that you are fully informed about all of the details of this, and other legal documents. Be sure to meet with your certified personal financial planner to discuss your personal situation and living trust options before making any final decisions.

Question:

What is a Living Trust?

Answer:

A living trust is a legal document that has the same function as a will except that in most cases, it eliminates the need for probate. A living trust is not a public record, and many of the costs resulting from probate and court involvement in a will are not present with this type of document.

Question:

Why would I need a living trust if I already have a will?

Answer:

By itself, a will is not a comprehensive estate planning tool. Wills almost always involve probate, and when a will is probated, it becomes public record, which means that unintended heirs can show up and cause delays and problems for all concerned. Also, your assets may be frozen for a time, which can cause financial hardship for your family. If you become incapacitated, a will is not designed to protect you from having a court-appointed conservatorship put in place to make medical decisions on your behalf. A living trust, which provides a provision for the appointment of authorized health agents to act on your behalf, eliminates this problem. In addition, living trusts provide detailed information about the transference of your assets to a second or third party that a will cannot.

Question:

How can I avoid probate with a living trust?

Answer:

A living trust can help you to avoid probate because all of your property is transferred from your name to the name of the trust. Although you still control your property as the Trustee, legally, you no longer own it, and nothing is left in your personal estate to probate.

Question:

Since I no longer own them legally, do I lose my assets if they are in a living trust?

Answer:

No. Because you are the Trustee of the trust, you still retain full control over your assets, and since your trust is both amendable and revocable, you can elect to change the terms at any time you see fit.

Question:

How long will it take before my living trust is prepared?

Answer:

It should take no longer than two weeks for your living trust to be prepared, and an additional few days for your assets to be transferred. Ask your attorney and/or certified personal financial planner for the details specific to your situation.

Question:

Will my living trust be expensive?

Answer:

Your definition of what constitutes expensive may not be the same as someone else's but no, living trusts are generally not expensive, especially when you compare them to the costs of probate and court-appointed conservatorship.

Your Estate Planning Strategy

Estate planning can seem like a daunting task, but remember that nothing is more important than the peace-of-mind that comes from having your, and your loved one's assets, property, and financial future thoroughly planned and secure. While you may not be able to predict what will happen from one day to the next, proper estate planning can help ensure that no matter what happens, the capital that you have worked so hard for will not slip through your fingers in the event that you are not personally able to oversee it.