A. The answer is probably no for most families. Here are the reasons:
1. A living trust is too expensive
An estate plan that includes a living trust costs $1,000 to $3,000, versus $300 or less for a simple will.
2. No need to such expensive protection
Most of your important assets do not need such protection from probate.
- A home or other property that's owned jointly with the right of survivorship goes directly to the joint owner when you die.
- So are pensions, retirement accounts and life insurance policies, which will all automatically transfer to the beneficiary.
- Bank accounts could be tricky - you can keep it out of probate by setting up payable-on-death accounts, which will give the recipient immediate access to the money.
3. Probate isn't always that bad
If you own a modest estate, many states have streamlined probate. Also you will benefit from the probate because someone is looking over what the executor is doing, making sure all the assets are found and all the debts are paid.
4. A small mistake could render your living trust useless
For example, if you want your home to be included in the trust, you need to record a new deed transferring ownership to the trust. This could be a hassle and if you overloop this step, your living trust is useless.
5. You don't know what might happen later
When you create a trust, you name yourself as trustee so you have control of the assets. Most married couples name their spouse as joint or successor trustee.
However, if you become incapacitated and your spouse develop dementia, complications will happen.
6. A living trust won't get you qualified for Medicaid.
Assets in a living trust are countable for purpose of Medicaid eligibility.
A living trust is hyped by people who would profit from it, most middle class families don't need it.
Which families could benefit from a living trust? See our next post.