While we have regularly advocate on behalf of revocable living trust, you should realize that living trusts have downsides as well. Just like any estate planning tool, understanding the positive and negative aspects of any part of a plan you might create is essential before you make any decision. To give you a better idea of what some of the downsides to having or creating a living trust are, let’s take a look at some important issues.
Living Trusts Are Not Ideally Suited For Everyone
Most people who talk to an estate planning attorney about creating an estate plan are typically middle-aged or older. The simple fact is that many younger people don’t have a lot of estate planning concerns, and talking to a lawyer about creating a revocable living trust is not high on their to-do list.
While we always advise every adult to have at least a basic estate plan in place, a revocable living trust may not be a part of your plan if you are younger, have few assets, are in good health, and don’t have children. For most people in this situation, revocable living trusts are not always cost-effective or useful.
Living Trusts Require Asset Transfers
The process of taking individually owned property and transferring it into a trust’s name is known as funding. Depending on the type of assets you have, the funding process will involve difference steps or requirements. In order to get the most out of your revocable living trust you have to make sure that you complete the funding process properly. While many assets are relatively simple to transfer into a trust, some could be more time-consuming and tedious, requiring you to take several steps before you are done.
Living Trusts Take Time and Money to Establish
Beyond all that, it’s important to point out that living trusts take some time and effort to put together properly. When you hire an attorney to create a living trust for you, you and your lawyer will go through a process in which you identify important issues that you need to take into consideration before you create anything. You also have to go through the process of making sure that the trust documents is created properly, that you transfer property into the trust’s name as you should, and that you go about administering the trust so that you can ensure you get the most benefit from it.
All of this takes time, effort and money. While the initial investment you put into the creation and use of your living trust is almost always recovered when it comes time to distribute your estate, it is an investment, and it is one you will have to pay up front. Nevertheless, over the long run a living trust is usually a beneficial estate planning asset to have.
Contact an Oklahoma City Estate Planning Attorney
For additional information, please join us for an upcoming FREE seminar. If you have questions or concerns about estate planning, contact the experienced Oklahoma City attorneys at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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