LIVING
TRUSTS
"What about living
trusts? I want to avoid probate!" Despite what the
"experts" on the bestseller list say, establishing a "living trust" may
or may not be right for you.
What is a living
trust? A "revocable" trust that you "fund" during life by
transferring most
or all of your assets into the name of a trustee. At your death, the
assets pass as the trust provides.
Advantages of living
trusts during lifetime:
Help with managing your property
Avoiding conservatorship
or other probate court procedures if you are unable to handle your
financial affairs
Maintaining control over
your property (you can change your mind)
Advantages of living
trusts at death:
"Avoid probate" (that is, avoid administrative expenses, including
attorneys' fees, that necessarily arise from required court filings and
hearings)
No delay in disposing of assets
No probate of out-of-state real estate that is held in a trust
Minimizes challenges (a Will must be "proven" to be admissible to
probate; a trustee can act according to the trust provisions unless the
trust is challenged in court)
Privacy
When
trust will continue
after death, no accountings required as could be required for trusts
under
a will.
Protection from statutory claims against your "estate" that may be made
by a spouse, or on behalf of a spouse by third parties (such as the
State, if the spouse is receiving Medicaid benefits)
But:
ONLY if nothing is forgotten. If you set up
the trust but fail to transfer property to the trustee, the trust
provides no benefit. If you transfer property to the trust, but
acquire new property that is not transferred, you do not avoid
probate.
In some states such as Connecticut, your estate will pay probate fees
whether or not your estate passes through probate; if your estate is
substantial enough to require a federal estate tax return, additional
probate costs may be relatively insignificant.
A living trust does not save death taxes or ensure Title XIX
eligibility.
It is sometimes important to have an "executor" appointed to make
claims against insurance companies or bring lawsuits, and this is
not possible without probate.
In some states statutory
rights against estates apply even if there is no estate and all
property
is held in a living trust.
Probate oversight may be
appropriate to ensure that your wishes are carried out unless you have
complete confidence in the trustee you select.
Attention: Under Connecticut law, when a probate
court is asked to appoint a conservator for a person who is claimed to
be "incapable" of managing his/her affairs, it must take into account
arrangements already made by the person claimed incapable - such as a
power of attorney, and presumably, a trust. The pros and cons of
a funded living trust notwithstanding, this law makes having a
living trust document in place, combined with a durable power of
attorney, an important and useful "emergency" tool to maintain control
over your affairs even when you are no longer capable of directing them
yourself.
For further
information on living trusts and estate planning, send email to me at davis@sharinglaw.net, or write
to me at the address shown. I can only provide general information,
and will not provide advice about a particular case without a formal
engagement. Writing to me does not create an attorney-client
relationship.
DISCLAIMER:
THIS INFORMATION IS
NOT
PROVIDED AS LEGAL ADVICE AND CREATES NO ATTORNEY-CLIENT
RELATIONSHIP. NO ENDORSEMENT IS INTENDED BY ANY REFERENCES
HEREIN. PLEASE CONSULT YOUR OWN LEGAL AND FINANCIAL ADVISORS
BEFORE TAKING ANY ACTION.
T
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Lisa
Nachmias Davis
Attorney at Law
205 Church Street, Third Floor
New Haven, CT 06510
Phone: 203-776-4400
Fax: 203-774-1060 or 776-4411
davis@sharinglaw.net
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