Question: What is a Living Trust, and is this something that my elderly parents should consider setting up?
A Living Trust is often “sold” as a device to avoid Probate. It seems that every week there is an ad in the local newspapers encouraging seniors to attend a lunch or dinner seminar where they will learn to avoid Probate. While this may be of benefit to some, there are, in my opinion, better reasons for couples and individuals to have Revocable Living Trusts. But, not only elderly parents should consider Living Trusts. This form of Estate Planning is beneficial for many age groups; from the young couple with the minor children, to the middle aged who may have grown the size of their estate to the taxable level, to the retired person who wants to assure a smooth transition of their assets to the next generation. There is no age group that is immune to incapacity, taxes, family issues, or death.
A Will, which most people have or are familiar with, only provides instructions to others when you die. Wills do not contemplate you becoming incapacitated, where as a Living Trust provides people that you, not the Court, want to help you manage your affairs should you become incapacitated. Why would you want to take a chance that this situation will arise and you will have a Judge, who does not know you, appoint another individual, who may not be a relative or even someone you know, to manage your financial as well as personal affairs. You can name that person now in your Living Trust, and also an alternate in case your first choice is unable to serve.
Another benefit of a Living Trust, also sometimes referred to as a Revocable Living Trust, or an AB Trust, for married people is the ability to increase the amount of assets that you are allowed to pass without paying Estate Tax.
Some clients are concerned about the privacy of their estate plan. While a Will is a public document which is available to anyone, a Living Trust is not. If you do not want your neighbor to find out that you gave your jewelry to your niece or that you disinherited your wayward son, then a Revocable Trust is for you.
Many of our clients own property in multiple States. They may own their home here in Connecticut and have a “winter home” in Florida or the Carolinas. Normally when they die there is Probate in both jurisdictions. A Revocable Living Trust will often eliminate that probate process for both.
And finally why would anyone want to have their estate go though Probate. It is a government process full of forms to be completed and hearings to attend. It is a long process, usually nine months to one year and is a public process, as described above, where anyone can go and observe what most people believe is a private matter. Oh, and it is not inexpensive either.
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Attorney George P. Guertin
Guertin and Guertin, LLC
North Haven, Connecticut
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