A comprehensive estate plan will typically include a wide range of estate planning tools and strategies that work together to achieve your estate planning goals. Although a Last Will and Testament often serves as the foundation of an estate plan, another common tool found in the average estate plan is a trust agreement. Unfortunately, there are several myths and misconceptions people share about trusts that often cause them to shy away from considering a trust for their estate plan. To make sure that doesn’t happen to you, the Los Angeles trust attorneys at Schomer Law Group, APC debunk common trust myths.
Because a trust is not something the average person will create or use on a regular basis, there are several common myths that have developed about trusts over the years. Believing any of these myths could be detrimental to your overall estate plan. Common trust myths include the belief that:
- Trusts are only for the wealthy. This was once largely true; however, not anymore. Over the years, trusts have evolved to the point where they are very user-friendly Today, the average person can often benefit from the addition of a trust in their estate plan without regard to the size or value of his/her estate assets.
- Once you transfer assets into a trust you cannot get them back. This one is partially true. Trusts can be revocable or irrevocable. If you transfer assets into a revocable trust, you can easily transfer the assets back out of the trust whenever you wish. On the other hand, once you transfer an asset into an irrevocable trust, the asset becomes the property of the trust. In that case, you no longer control the asset.
- Creditors cannot get to assets held in a trust. This is also partially true. If the assets are held in a revocable trust, they are not safe from creditors; however, if the assets are held in an irrevocable trust they are typically out of the reach of creditors because you no longer have any legal ownership interest in the assets.
- You lose control of assets once they are transferred to a trust. Once again, this depends on what type of trust is involved and who the Trustee of the trust is. A revocable living trust is often used for incapacity planning because you can name yourself as the Trustee of the trust and someone you trust as the Successor Trustee. In that case, you will continue to control the assets held in the trust as the Trustee unless you become incapacitated, at which time control will shift to the Successor Trustee. If, however, you are not the Trustee of the trust, or an irrevocable trust is involved, you will indeed lose control of the assets. This is why it is so important to work with an experienced trust attorney when deciding what type of trust to create and when drafting the trust terms.
- Modifying a trust is difficult. Not true if the trust is a revocable trust. A revocable trust can be modified using a trust amendment or a trust restatement, either of which can be completed relatively easily with the assistance of your trust attorney. Modifying an irrevocable trust is much more difficult – but not impossible.
- Trust assets go through probate too. Not true. In fact, this is one of the primary reasons why people choose to use a trust as their primary document for the distribution of estate assets. Assets held in a trust bypass the probate process, meaning they can be distributed to beneficiaries much faster.
Contact Los Angeles Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about creating a trust, contact the experienced Los Angeles trust attorneys at Schomer Law Group APCby calling (310) 337-7696 to schedule an appointment.