In order to avoid probate through a Living Trust, you must transfer assets to the trust before your death. On your death, any assets remaining in your name and not in the trust must be probated. (This would not include property that is held jointly with survivorship rights with another person or where a beneficiary was already named.) Because you must transfer at least your major assets to the trust, a Living Trust is more complicated and time consuming to set up than a Will. Even if you are the trustee, when you handle your own business, you will do so as the Trustee rather than as an individual. In addition to transferring assets to the trust when the trust is set up, you must also transfer assets that you acquire later to the trust. These transfers are not necessary with a Will.
In addition, you should be aware that you will not save any taxes by setting up a trust, unless the value of your property is greater than the “Unified Credit” allowed by Federal Estate tax law. The “Unified Credit” is $1,060,000 in 2003, and will increase in annual increments to $2,000,000 in 2006. If your assets are greater than the “Unified Credit” at the time of your death, there can be tax advantages in the creation of trusts, assuming the trusts are set up and funded properly.
Finally, people often believe that setting up a trust will result in one’s heirs not needing an attorney and that the transfer of the assets will be simplified and quicker. That is generally not true. The property owned by the “trust” will still have to be transferred to the trust beneficiaries after the death of the original trustee. Generally, the time involved, complications and need for an attorney will be the same with or without a trust.
Is it worth the time and trouble for you to set up a Living Trust? In general, couples who jointly own their home and have few other assets may not need a Living Trust. On the other hand, if you have numerous or complex investments, real estate in more than one state, or want to leave your estate to persons who you do not believe could manage it on their own, or if the value of your assets are greater than the “Unified Credit,” you may be a candidate for a Living Trust. The final answer to this question should be made after a thorough review of your estate and a discussion of your needs and desires with an attorney.