So-called “living trusts” are highly touted. They offer real advantages but there are disadvantages, too. Getting the benefits requires time, effort, and money.
Most mentions of living trusts refer to revocable trusts, which can be canceled by the creator. (Irrevocable trusts can’t be canceled.)
You usually can be the trustee and beneficiary of your revocable trust. With this arrangement, you remain in control of any property that you place in the trust. Advantages include:
• Protection in case you become incompetent. A successor trustee or co-trustee can take over responsibility for any assets owned by your revocable trust. This process can take place privately, without a public court hearing.
• Probate of trust assets won’t be required. Because the assets are held by a trust, not by an individual, they won’t be subject to the time and expense of probate. They’ll pass directly to recipients named in the trust documents.
So what’s the downside?
• Cost. Expect to spend at least $500 to have a lawyer draw up your revocable trust. The amount may be much higher if your affairs are complex and special provisions are included.
• Effort. You must re-title assets you own so that they are owned, for example, by the Jane Doe Revocable Trust. Otherwise, the benefits of a revocable trust won’t be realized.