Trusts have been around for hundreds of years; specifically, the living trust gained popularity in the 1970s as a probate avoidance technique. Today, living trusts are often used as a foundational document in estate plans.
We’ve found that many folks have both questions and misconceptions about the living trust; so, in this three part series, we answer your living trust questions.
Does everyone need a living trust?
Most folks would likely benefit from having a living trust; however, if your assets are modest, it may not be worth the financial investment to set up the trust. It really depends upon all of your goals, not just the amount of money you have. A couple of benchmarks that typically weigh in favor of a trust-based plan over a will or other planning method is when you own real estate or have assets in excess of $150,000. The best way to determine what planning tools are best for your personal situation is to consult with an experienced, qualified estate and elder care planning attorney.
Does a living trust protect my assets from my creditors?
First, in general, a living trust does not protect your assets from your own creditors during your lifetime.
However, a living trust can be drafted with asset protection trust shares for your beneficiaries such as your spouse and children. This means that the assets you leave for loved ones can’t be taken by their creditors in bankruptcy, divorce, or lawsuits.
Do I have to maintain my living trust?
Your living trust, as well as all of your estate planning documents, should be professionally reviewed periodically, sooner if you experience a significant life change such as a change in wealth, health, or personal situation, e.g., divorce or move to a new state. Your trust may or may not need to be updated at that time.
In addition, newly acquired assets (i.e. new investment account) or new home should be titled in the name of your living trust.
If you missed parts 1 and 2 of Answers To Your Living Trust Questions, you’d likely benefit from reading them.