Frequently Asked Questions
1. I have a will. Why would I need a living trust?
Contrary to what you’ve probably heard, a will may not be the best plan for you and your family–primarily because a will does not avoid probate when you die. Almost all distributions directed by a will must be processed and supervised by the probate court.
Also, because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated. So the court could easily take control of your assets before you die–a concern of millions of older Americans and their families.
Fortunately, there is a simple and proven alternative to a will–the revocable living trust. It avoids probate and lets you keep control of your assets while you are living and lets you direct who will handle your affairs upon your incapacity or death.
2. What is probate?
3. What is so bad about probate?
It can be expensive. Legal/executor fees and other costs must be paid before your assets can be fully distributed to your heirs. If you own property in other states, your family could face multiple probates, each one according to the laws in that state.
It takes time, usually 8 months to 2 years. During part of this time, assets are usually frozen so an accurate inventory can be taken. Nothing can be distributed or sold without court and/or executor approval. If your family needs money to live on, they must request a living allowance, which may be denied.
Your family has no privacy in probate. Probate is a public process, so any “interested party” can see what you owned and who you owed. The process “invites” disgruntled heirs to contest your will and can expose your family to unscrupulous persons.
Your family has no control. The probate process determines how much it will cost, how long it will take, and what information is made public.
4. Doesn't joint ownership avoid probate?
Not really – it usually just postpones it. With most jointly owned assets, when one owner dies, full ownership does transfer to the surviving owner without probate. But if that owner dies without adding a new joint owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.
Watch out for other problems. When you add a co-owner, you lose some control. Your chances of being named in a lawsuit and of losing the asset to a creditor are increased and there could be gift and/or income tax problems. And since a will does not control most jointly owned assets, the end result may be that the asset ends up not going to the persons you would have wanted.
With some assets, especially real estate, all owners must sign to sell or refinance. So if a co-owner becomes incapacitated, you could find yourself with a new “co-owner” — the court — even if the ill co-owner is your spouse sometimes a conservatorship becomes necessary and the court now has to approve any decisions on the property.
5. Why would a court get involved if I become incapacitated?
If you can’t handle your own affairs due to mental or physical incapacity (Alzheimer’s, stroke, heart attack, etc.), only a court appointee can sign for you – even if you have a will. (Remember, a will only goes into effect after you die.)
Once the court gets involved, it usually stays involved until you recover or die. The court, not your family, controls how your assets are used to care for you. This public process can be expensive, embarrassing, time consuming and difficult to end if you recover. And it does not replace probate at death – your family could have to go through both a conservatorship and a probate. All that can be easily avoided with some simple estate planning.
6. Does a power of attorney prevent the court's involvement at incapacity?
7. What is a living trust?
8. How does a living trust avoid probate?
When you set up a living trust, you transfer assets from your name to the name of your trust (which you control), for example, from “Bob and Sue Smith, husband and wife,” as individuals, to “Bob Smith and Sue Smith, as Trustees under the Smith Family Living Trust dated June 30, 2008.”
Legally, you no longer personally own what is transferred to your living trust (don’t panic: everything now belongs to your trust and you control the trust), so there is nothing for the courts to control when you die or become incapacitated. The concept is very simple, but it is this change of title to your assets that keeps you and your family out of the probate courts at death and avoids court supervision of your financial affairs upon incapacity.
9. Do I lose control of the assets in my trust?
10. Is it hard to transfer assets into my trust?
No. Some assets, like real estate, will be transferred for you by the attorney. For other assets like stocks, CDs, and bank accounts, you will need to change the titles, but the attorney will show how it is done. Most living trusts also include jewelry, clothes, art, furniture, and other assets that do not have titles, but not detailed lists are necessary.
Also, beneficiary designations on some assets (like insurance) should be changed to your trust so the court can’t control them if a beneficiary is incapacitated or no longer living when you die. IRAs 401(k)s, etc. can be exceptions. The attorney will explain how all this works.
11. Doesn't this take a lot of time?
12. Should I consider a corporate trustee?
13. If something happens to me, who has control?
14. What does a successor trustee do?
15. Who can be successor trustees?
16. Does my trust end when I die?
17. How can a living trust save on estate taxes?
18. Doesn't a trust in a will do the same thing?
19. Is a living trust expensive?
20. How long does it take to get a living trust?
21. Should I have an attorney do my trust?
Yes, but you need the right attorney. At Williamson & Gentilini, we have considerable experience in estate planning and will be able to give you valuable guidance and peace of mind that your trust is prepared properly.
You may see advertisements for “document assistants” or “paralegals” who claim to perform these services for an unrealistically small fee. They provide shoddy fill-in-the-name type forms that usually cause more problems then they solve. By law, these “document assistants” or “paralegals” cannot give you legal advice – doing so is a criminal act. If you have a trust that was drafted by one of these type operations, our office can fix it for you. Call for more info.
22. If I have a living trust, do I still need a will?
23. Is a 'living will' the same as a living trust?
24. Are living trusts new?
25. Who should have a living trust?
26. Summary of Living Trust Benefits
- Avoids probate at death, including multiple probates if you own property in other states
- Prevents court control of assets at incapacity
- Brings all your assets together under one plan
- Provides maximum privacy
- Quicker distribution of assets to beneficiaries
- Assets can remain in trust until you want beneficiaries to inherit
- Can reduce or eliminate estate taxes
- Inexpensive, easy to set up and maintain
- Can be changed or cancelled at any time
- Difficult to contest
- Prevents court control of minors’ inheritances
- Can protect dependents with special needs
- Prevents unintentional disinheriting and other problems of joint ownership
- Professional management with corporate trustee
- Peace of mind
Have More Questions?
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