PREPARED FOR THE FUTURE
Living trust offers protection will doesn't cover
Copley News Service
So, you feel the need to update your will. You'd be better off setting up a living trust.
What it really comes down to is probate court, lawyers and money. Lots of time and lots of money.
"If you have property or a family, you need a living trust. Wills are passe," said San Diego attorney Jeffrey Isaac.
And, updating is vital.
"Even with a living trust you need to update every three years or as things change. They work like a charm," he said.
With wills, you are not covered if you are incapacitated or dead. "Look at the Terri Schiavo case. (With a living trust) That never would have happened."
In the Schiavo case, the Florida woman collapsed at home in 1990 and was left in a persistent vegetative state. In 1998, her family and husband battled each other over whether she should be removed from life support - a feeding tube. She was, eventually, and died in 2005, 15 years after falling ill and five years after her husband petitioned the court for the feeding tube's removal.
Wills don't avoid these conflicts. Trusts do, as they contain advanced health-care orders. Schiavo had neither.
"Trusts work like dynamite. You save thousands and avoid the court system. All that goes away," Isaac said. "Without it, you have all this money tied up and the government has full control of what you should privately be in control of."
So, according to Isaac, here's the scoop on living trusts:
- Avoid probate. That means your family saves about four years of court craziness, avoids lawyers, court bureaucracy and legal fees.
- Flexibility. The living trust can be changed at any time by you.
- Control. In the event of incapacity the trust kicks in. No lawyers, guardianship hearings or conservatorships. Save some bucks.
- Disability. In the event of incapacity the trust kicks in.
- Privacy. Leave the government out of your private business.
- Access. Ensure you have access to your vital documents when you need them.
Specifically, a trust is a set of written instructions whereby a person, or married couple, can transfer property to their heirs upon death without having to involve the probate court. The probate system charges fees based on the gross value of the estate.
A revocable living trust is set up during your lifetime. You control it. It is a living document and as such can be changed as you see fit. It is not set in stone. You never lose control of your property and you can always terminate, modify or revoke the trust and reclaim the assets.
Advantages of a living trust include:
- Cuts costs. The executor fees are based on a percentage of the decedent's gross estate.- Saves time. An average probate proceeding takes several years. With a living trust, property can transfer to beneficiaries in weeks.
- Assures privacy. Probate hearing are public. Living trusts are private.
- Avoids multi-state problems. If you have property in more than one state, more probate proceedings are involved. With a living trust, all assets from each separate state are placed into one trust.
- Discourages legal challenges. As a general rule, trusts are much harder to contest than wills because of the time factor. By the time someone wants to contest a will, with a living trust, those funds will most like have been distributed. Contesting the trust will cost a lot of time and money and thus will discourage most people from challenging the document.
- Protects during disability. An often overlooked reason for a living trust is to ensure that someone will be available to handle your financial and legal affairs if serious illness renders you incapable.The cost of setting up a living trust can run from $500 to $8,500 with the average being $3,000, Isaac said. Changes can run from a few hundred to a few thousand, depending.
Isaac starts the process by providing questionnaires to families. They then decide who their beneficiaries will be and how their assets will be distributed.
Can you do it by yourself or on the Internet?
"Yes, you can and no you shouldn't" Isaac said. "Trusts are very complex and it's very easy to screw everything up and everything becomes invalid."
? Copley News Service
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