Are Living Trusts Necessary?

Jackie Bedard
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Attorney, Author, and Founder of Carolina Family Estate Planning
It's common these days for lawyers to get some push back from clients whenever they recommend Revocable Living Trusts (RLT). The resistance stems from their clients' perception that RLTs are only good as tax-planning tools. 

With the federal estate tax exemption currently set at $5.49 million per individual (potentially $10.98 million for a married couple), and the gift exclusion at $14,000 per person, some would argue that the need for estate tax planning for everyone but the extremely wealthy is pretty much done. 

We disagree. There are significant benefits to an RLT beyond tax protection. 

More Control

With a properly drafted RLT, a client can not only control who inherits his assets, but how those assets are disbursed and under what circumstances

The trust grantor (the client) can set up rules or stipulations in the trust that must be met before assets are inherited by beneficiaries. The trustee, chosen by the client, manages those assets per the wishes of the client.

Better Privacy

A simple will, properly drafted, is essentially no more than a letter to a probate court. It informs the judge of a decedent's wishes about what he or she wanted done with personal property and other assets, but the court can rule differently. 

Documents filed in a probate case and court hearings are public record, meaning that if all a client had was a will, then his personal worth and any records of family infighting over the estate could make the headlines. An RLT is executed outside of a probate court's venue, keeping the entire matter private and out of public view. 

After death, the RLT continues to offer protection to the client's heirs. If titled in the name of the trust, assets are shielded from a beneficiaries' creditors, lawsuits and divorce settlements. It also helps protect a client's children from "accidental" disinheritance when a surviving spouse remarries.

Less Time, Hassle, and Stress

Probate administration can last many months to several years, depending on the size and complexity of an estate. Unless there are unusual assets or circumstances, administering a trust generally takes less than a year. 

We ask clients how much grief and anxiety they are willing to let their heirs endure after their death due to poor planning. An RLT can dramatically reduce the wait time for an estate to be settled, allowing beneficiaries to move forward with their lives much sooner and receive the assets a client wanted them to enjoy and benefit from.

Revocable Living Trusts are fantastic tools. If a client who may need one as part of his or her plan, we would be delighted to explain how it can work for them.

To read more about common estate planning concerns, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate and Your Family's Future. If you have a specific case or a question, please don't hesitate to call our office at 919-443-3035 or through our contact form.