Living Trusts – Benefit or Burden?

We have been bombarded by ads, encouraging us to attend free living trust seminars. The promise? Save taxes, avoid probate, keep property for your loved ones.

And, for the most part, that promise is fulfilled. Living trusts operate to hold real estate in a way that should minimize (if not entirely eliminate) estate, gift and income taxes. Yes, the primary function of a living trust is to avoid probate court interference, either through a guardianship (for distributions to minor beneficiaries), conservatorships (for incapacitated adults) and probate administrations (or, more realistically known as, title transfer procedures upon death).

There can be a substantial savings of time, effort, court costs and, yes, attorney fees if a living trust becomes the primary dispositive instrument in an estate plan.

However, there have been too many times when the best intentions have gone awry.  The probate courts (yes, the probate courts!) have been inundated with living trust disputes, stemming in many instances from improperly worded distributions to changes in circumstances that were too difficult to predict to trust disputes as to the intention of the trust’s creator.   The court’s calendars have grown in length, due in large part to issues involving defective or misleading trust instruments.  What could have been an easy way to administer and distribute an estate, through a living trust, in many ways turns out to be the most expensive way to handle an estate (after court costs and attorneys fees in a trust dispute).

Can a living trust be a benefit or a burden?  There are no guarantees as to the outcome, but with proper planning and careful thought and selection as to the Trust’s administrators (or Trustees) and beneficiaries, you can plan to have a successful, effective and efficient way to distribute your assets through a living trust.