Living, or inter-vivos trusts, are a commonly used instrument in estate planning and many financial experts tout their benefits. While they do help people accomplish some goals, my experience has taught me that many people seem to be overselling these tools with promises far from the truth. So when is a living trust the right choice for you and your family?
If you have significant wealth that will be subject to estate tax, live in a state where probate can be a very expensive and time consuming process (my home state of Pennsylvania is not one of them however), or you wish to avoid public scrutiny due to your profile in your community, it may be a very good idea to look into the possibility of developing a living trust.
Conversely, it is important to understand that a living trust does nothing to reduce the need for a Will, protect assets from creditors, prevent challenges from disgruntled heirs, ease the qualifications for Medicaid, or the necessity to pay income, estate or inheritance taxes. It simply provides an additional layer of privacy and oversight when properly drafted.
If you think a living trust is a good option for you there are various places where you can obtain one. Internet sites and software packages will be happy to sell you so-called “trust packages” which you could try, but your best option is an estate planning attorney in your area. They know the state law, will be able to draft a legally binding instrument, and stand behind their work so you can rest assured that your document will perform properly.
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