AZ Estate Planning News

AZ Estate Planning News

Knollmiller and Arenofsky Trust and Estate Planning

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Advantages vs. Disadvantages of a Revocable Trust

New Grandchild

Advantages of a Revocable Living Trust

  • Avoidance of probate. In particular, a revocable living trust can avoid expensive multiple probate proceedings when you own real estate in several different states, as well as the publication of the otherwise private financial details of your estate.
  • Avoidance of conservatorship. A revocable trust can avoid the additional cost of a conservatorship in the event of your incapacity.
  • Efficient distribution. A revocable trust can reduce delays in t istributing your property after you die, although delays caused by filing an estate tax return cannot be avoided.
  • Confidentiality. Generally the terms of your living trust are confidential, with only your named beneficiaries and trustee having access to that information.
  • Continuity. A trust can provide continuity of management of your property after your death or incapacity.

Disadvantages of a Revocable Living Trust

  • Expenses of planning. A revocable living trust can be a little more complicated than a will to draft, and asset transfers can take time and can result in additional costs.
  • Expenses of administration. If you appoint a bank or trust company as trustee, you will have fees to pay (though these may take the place of investment advisory fees and other fees you are already paying).  Of course if you do not use these services, this additional expense will not apply.  Setting up a revocable living trust will not eliminate the need for professional services of attorneys and accountants in the future.
  • Inconvenience. Once the trust is established, you must be sure that trust books are maintained and that all assets continue to be registered to the trustee.   Again, this is not a large issue but certainly is something to consider.
  • Unforeseen problems. Revocable living trusts can raise a variety of new problems regarding the ability to borrow against property, title insurance coverage, real estate in other countries, Subchapter-S stock, certain pension distributions, and many other issues. Only a skilled attorney familiar with estate planning can tell you whether, on the whole, a revocable living trust is right for you, your family and your assets.

In this author’s opinion, the advantages far out weight the disadvantages

This is based on an posting by the Oregon State Bar

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Recent Trends Part III

Another trend in living trust and estate planning is less concern about probate and more concern about possible incapacity.

18/365 Probate

The “typical” client 20 years ago was very concerned about ending up in probate after their passing.  I am not sure if this came from all the advertised estate planning seminars that used this to scare people into living trusts, or more accurately stated, buying their financial products.   Probate is certainly still a concern for many clients, which in this writer’s opinion isn’t the terrible process it is made out to be.  The bigger concern now is a client’s possible dementia or incapacity in later years.

This is certainly an advantage of a trust over a will.  The assets held in trust and an excellent power of attorney for the day to day financial matters are a great way to take care of each individual in later years.  If one happens to be unable to care for their own self, their successor trustee and agent under the power of attorney can almost always take care of all their financial matters without court action, conservatorship or governmental involvement.

 

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