Advantages - The greatest advantage of a living trust is that any assets funded into the trust will avoid probate, and because assets distributed through a trust pass outside of the probate court, there is no record of the distributions made public.

Living trusts also reduce estate taxes while providing for the surviving spouse. In addition, in a living trust, you determine when income or principal will be distributed to the beneficiaries. You may also set up the ages and purposes (e.g., health, education, support) which a trustee may distribute income or principal to a beneficiary. Furthermore, a living trust provides that assets pass to your children upon your surviving spouse's demise, thereby making a living trust a particularly useful estate planning tool in a remarriage situation. And finally, living trusts protect assets from a beneficiary’s creditors.

Disadvantages - The main disadvantage in a living trust is that there is no one around to supervise an inexperienced trustee. Should the trustee commit an error, no one may ever find out about it. Another disadvantage is to avoid probate you have to take the steps necessary to transfer your assets into your trust or change the beneficiary designations. Processing the paperwork is time consuming, and it will cost you some money to draft the trust agreement properly. Finally, a living trust is far more expensive to draft than a simple Will.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.