Disadvantages of a Living Trust
No matter how you look at it there are disadvantages and advantages to both the living trust and a living will. Depending upon your circumstances and the type of the state that you have can determine which of these two would be better for you and more appropriately fit your needs. In reality a living trust has many advantages over a living will and that there are no proceedings in probate court and because of this it is not public record therefor your family will have privacy while grieving the loss of their loved one. The disadvantages of a living trust are few and far between and very minor. In most cases these disadvantages don’t really mean anything. However let us consider and look at these disadvantages and what they mean. Finding a trust can be difficult. The larger the trust the more complex it will be and the more difficult it then becomes says LA Probate Law. To make a living trust effective all assets and properties need to be transferred into the trust. This process can be very time consuming. You must obtain a separate deed for each property that you are transferring into the trust. California law requires that any property being transferred from outside of the state must be done so according to the other states laws.
When the paperwork is prepared you must then go to your counties recorder’s office to record them. You can either do this yourself or pay somebody to handle it for you. You must also get records of all of your bank accounts, stocks, bonds, mutual funds and any other investments that you have and have these transferred into the trust as well. This too can be time consuming as it entails visiting each bank, broker or other financial institution. Other items of value such as boats, cars or Motor Homes must also have the title changes. All of these will have to be filed and you will have to physically go down and stand in line waiting at the recorder’s office to do so. To add to all of this work you will need to make your living trust your secondary Ira, annuity, 401 K and insurance beneficiary. Although this is not required to be done immediately you must keep in mind that if something were to happen prior to your finishing these things your estate would risk probate.
Once your trust the setup and you go into a grocery store or department store it can be frustrating to try and write a check. You’ll find yourself trying to explain that you’re the trustee of your own living trust and that your ID is sufficient. As trusts are becoming more common in people more aware of them this isn’t as difficult as it used to be however there is still large part of society that has no idea and can make this a difficult thing. Another downside is that it can become difficult to refinance any of the properties that you all. Most financial institutions and banks will not allow you to refinance property that is transferred into a living trust. In order to accomplish this you have to remove it from the trust get the financing approved and when all was said and done start all over again by having a transfer back into the trust. This is yet another time consuming process for you to deal with. If you hire an attorney most of this is not your responsibility and will be taking care of by him or her. Just keep in mind that the lawyer is not there simply to run errands and you need to find one who is experienced in LA Probate Law.
You must always keep in mind that when purchasing anything new that people you are dealing with do not necessarily realize that there is a trust involved at all. Example when you’re buying a car you will have to take the title in your name listed as trustee of your trust. Because it is not have it is easily forgotten especially if your trust is new and you are not used to dealing with it yet. You may also run into the cells person who really doesn’t understand living trust and then they insist that you have a separate Federal income tax ID. This can very quickly become very frustrating. This may not seem like a very big drawback that it can create awkward moments and as stated above be very frustrating. The final drawback of a living trust is like a double edged sword because the drawback is also one of its greatest benefits. Upon your death a living trust does not have to go through probate. The process is much quicker and much quieter without lawyers and courts involved. Seems as though the benefits are pretty obvious but what are the drawbacks? When the time comes and the trustee is put in charge there will not be anybody watching over his shoulder and guaranteeing that he is acting properly. When you choose the person was going to be your trusty it is extremely important that you trust this person 100% to look after your family and your estate. It is very simple for a trustee to deceive beneficiaries or mishandle assets being intentionally or accidentally. As with probate there is no judge who reviews everything that goes on within the trust and the distribution of the asset. There are a couple of solutions to this problem if there’s any doubt in your mind as to the trustee that is been designated. Hiring an attorney to oversee what is going on with your trust can help divert any temptation that maybe there if the trustees intentions are to be dishonest. However if the trustee is honest and there are no bad intentions, having an attorney who understands all the small details of LA Probate Law, can help to avoid innocent accidents or misappropriation of funds.
Disadvantages of a Living Trust
- Ideas for Eco-Friendly Estate Planning - February 15, 2024
- What to Do After a Terminal Diagnosis: A Practical Guide - February 14, 2024
- The Importance of Estate Planning for Members of the LGBTQIA+ Community - February 10, 2024