People often harbor misconceptions about estate planning. This is one of the reasons why it is very important to discuss your options with a licensed attorney from our firm. Unfortunately, many people make assumptions, and the results of their poor decisions are less than ideal.
This often enters the picture when it comes to the legal device called a living trust. In this guide, we will look at five common myths that circulate about living trusts and clarify the facts in a concise, straightforward manner.
Myth #1: Only wealthy people use living trusts.
The notion that living trusts are only for high-net-worth individuals is a common misconception. While some people associate trusts with wealthy families, many individuals and families use living trusts as part of their estate plans. A living trust can help avoid probate, maintain privacy, and provide a smoother process for managing and distributing assets after death. Although certain types of trusts may be used for estate tax planning, a standard living trust is primarily designed to provide flexibility, control, and an organized way to manage your assets.
Myth #2: You lose control of assets that you convey into a trust.
Getting back to the trusts that are used by those that are exposed to the estate tax, they would be irrevocable trusts that cannot be revoked or dissolved later on. Generally speaking, the grantor of such a trust would not be able to act as the trustee and administer the trust.
This is called “surrendering incidents of ownership” in legal parlance. Because the grantor of the trust has no ongoing control, the assets would not be part of their estate for tax purposes.
A living trust is a revocable trust, so you can in fact change your mind and dissolve this type of trust at any time. There is no loss of control at all, and you can actually act as the trustee and the beneficiary while you are living.
Myth #3: A trust is expensive, but you can create your own will for practically nothing.
First of all, you should understand the fact that planning your own estate using a worksheet that you obtain online is not a good idea. You don’t have to take our word for it, because the highly regarded, totally objective people at Consumer Reports recommended against DIY estate planning when they examined the subject.
Secondly, there are expenses that accumulate if you use a last will as the centerpiece of your estate plan. These would include court costs, appraisals, liquidation charges, and the executor’s remuneration.
We find that our clients are totally satisfied when they learn about our rates, and the effective, streamlined estate administration process can save your family money in the long run.
Myth #4: It takes forever for your heirs to receive their inheritances if you use a trust.
Another drawback that goes along with the use of a will is the time consumption. Probate will take about eight or nine months to a year, even if there are no complications. The inheritors do not receive anything during this interim, so they have to play a waiting game.
Things are entirely different when a living trust is used. The distributions are not subject to probate supervision, so in most cases, the trustee can get assets into the hands of the beneficiaries in a much more timely manner.
Myth #5: If you don’t know anyone personally to act as the trustee after you die, you cannot use a living trust.
This is not the case at all. There are professionals that can be engaged to handle the trust administration duties.
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If you are ready to discuss your legacy with a Connecticut estate planning attorney, we are here to help. You can send us a message to request a consultation appointment at our Glastonbury or Westport estate planning offices, and we can be reached by phone at 860-548-1000.
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