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NC and SC Estate Planning and Elder Law Firm

Tuesday, April 12, 2022

Differences Between a Conservatorship and a Power of Attorney

Have you ever heard of a living trust? Have you ever considered using a living trust in your estate plan? While an extremely useful estate planning tool, many have not heard of a living trust or, may have heard of it, but have never considered adding to their estate plan. That is mainly because trusts remain mysterious to most. Many view it is something that wealthy individuals establish for things like tax purposes. The truth is, however, that trusts can be useful to everyone. To give you a clearer picture of what a living trust is, we will discuss the pros and cons of living trusts here.

The Pros and Cons of a Living Trust

The truth of the matter is that, while there are several big benefits to a living trust, there are actually not many drawbacks. Yes, there will be paperwork and logistics associated with establishing and managing a living trust. A trust is created by the trustor and managed by an appointed trustee for the benefit of the trust beneficiaries. In order to fund a trust, property must be transferred into the trust. To do this, ownership of property must be transferred into the name of the trust. This, of course, will require additional paperwork.

There will also be the need to maintain accurate written records regarding management of the trust. This means that any transfers of property into or out of the trust must be maintained. Usually, however, this involves minimal maintenance. After the initial property transfers to fund the trust, there is not often a whole lot of transferring activity to record.

As for the benefits of a living trust, there are many. One of the most common reasons people establish a living trust is as a means to avoid probate proceedings. Probate is often dreaded for a number of reasons, cost being a big one. Probate can not only be expensive, but it can also be time consuming and frustrating. On top of all of this, little to no privacy is afforded to what goes on in probate. Probate proceedings become a matter of public record. This means your probate estate and who gets what is available for public review.

Living trusts also offer a unique way to structure and protect the inheritance you wish to leave to your loved ones. While lump sum inheritances are all too easily whittled away, you can structure living trusts distributions to take place over time. You can also condition trust distributions on certain events occurring, such as your child going to college. You can also stipulate the trust distributions are only to be made for certain purposes, such as expenses incident to going to college and moving to a new place. In having the ability to structure and condition trust distributions, you can help ensure that the assets you are leaving your loved ones go to good use.

Trusts, generally speaking, also help to reduce the possibility of your wishes being challenged in court. Will contests have lower thresholds than trust contests. It is more difficult to prove that a trustor was incompetent than the testator of a trust. This is due, in large part, to the fact that a living trust is established and managed during the trustor’s lifetime. In the case of will, a will is often put aside once executed and does not require active management.

Estate Planning Attorney

Do you have questions about whether a living trust should be a part of your estate plan? Talk to Monk Law about your options. Contact Monk Law today.


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