If you are a regular reader of our blog you already know that living trusts are a common element in many modern estate plans. However, you might also be under the influence of some common living trust myths that circulate in the general population. Many of these myths are often repeated online, and even those that are not still pop up pretty regularly when people discuss living trusts with others. To help dispel these misperceptions, today we are going to take a look at some common living trust myths and why they are not true.
I shouldn’t create a living trust because it will mean losing control over my property.
The basic process of creating a revocable living trust is fairly straightforward. First, you and your attorney will sit down and draft a trust document that contains the rules and terms under which the trust will operate. You’ll only do this after discussing your options with your attorney, and after understanding what each of your decisions will mean for the trust.
After you’ve completed the trust document, you’ll then begin the process of transferring the property you own as an individual into the trust’s name. This is known as funding the trust.
Once the trust is completely funded, the trust will effectively become the new owner of all of your property. This idea that the trust will own the property instead of you leads many people to naturally assume that they will therefore lose control over the property they transfer into it.
This is not the case. When you create a revocable living trust, you typically choose yourself to be both the beneficiary and the trustee. This means that not only will you have the responsibility of managing the trust property, but you will also retain the ability to use it. In other words, transferring your property into a living trust will not result in any loss of control.
If I create a living trust I don’t need to worry about creating a will or other estate planning tools.
While a living trust is an excellent estate planning tool to have, it isn’t the only one you need. For example, your living trust will not give you the ability to name an executor who will manage your estate after you die. Nor does it give you the ability to name a guardian who will take over caring for any minor children in the event of your death. In order to accomplish both of these goals you will need to create a last will and testament. Further, other estate planning devices will afford you additional protections that your living trust cannot. In short, a living trust is an excellent tool, but it cannot, by itself, afford you all the protections that a comprehensive estate plan does.
