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Making Sense Out of Dollars

Trust Me

Joel Lerner, Columnist
Posted 5/28/21

Part 5 of 11

What Are The Major Advantages Of The Revocable Living Trust?

In addition to avoiding the costs of probate, a living trust affords many advan­tages to both the trustor and …

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Making Sense Out of Dollars

Trust Me

Posted

Part 5 of 11

What Are The Major Advantages Of The Revocable Living Trust?

In addition to avoiding the costs of probate, a living trust affords many advan­tages to both the trustor and his or her heirs:

1. A revocable trust can be changed or terminated at any time before the trustor dies.

2. Because the trustor retains the right to get back all property transferred to a revocable trust, those assets are not considered gifts for estate, gift, or income tax purposes. Any income that comes from the assets in the trust will remain taxable to the trustor during his or her lifetime.

3. Unlike a will, a living trust can (in many states) attempt to shield the estate from creditors. With a will, the executor is required to notify the creditors of the death of the maker of the will—by mail or newspaper advertisement—so that they can submit any claims against the estate. No such publicity would take place in a living trust since no public notification would be needed.

4. The trust avoids the courts and the general public. For example, when an estate goes through probate, the court freezes its assets for several months and makes notice that interested parties can come forward if they wish to contest the will. However, the assets of the trust are not frozen, and in many cases, the trust is dissolved and assets distributed to the beneficiaries long before the disgruntled heir has a chance to act. He or she would then have to sue each beneficiary separately.

5. Although not generally known, anyone owning real estate in more than one state should have a living trust. This is so because the trust will avoid “ancil­lary probate,” a costly, time-consuming judicial process that develops when death occurs to the owner of the real estate property in a state other than the one in which the deceased owner lived.

6. Last, but not least, a living trust can be a source of comfort if you should become incapacitated. If a successor trustee is appointed, a debilitating ill­ness will not cause financial hardship since your trustee has the authority to pay your bills and handle your investments in a prudent manner. It thus avoids the possibility of having guardianship proceedings, which are costly and difficult to administer. Another simple method to accomplish the same objective is to designate a durable power of attorney to someone to make financial and living decisions on your behalf in the event you should become incapacitated. 

THOUGHT OF THE WEEK

Be careful of toes you step on today because they may be attached to the backside you may have to kiss tomorrow.

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