Living trusts are sometimes pitched to Florida seniors in high-pressure environments, with salespeople contending that probate fees will be lower if a trust is in place. These people often convince older citizens to create trusts where they may not be needed. Experts advise that those interested in proper trust administration first consult a lawyer and financial adviser before listening to salespeople.
A living trust is a legal arrangement created to transfer individual assets into the care of a trustee. The trustee is usually the original owner of the asset or property, and successive trustees are designated to take over if the original person is disabled or dead. Living trusts are sometimes established with the intent to avoid probate, though legal experts say it’s just a way of paying death benefit fees up front. Clients still must pay to have the legal documents drawn up to transfer property.
Living trusts essentially allow people to be the executors of their own wills, transferring assets and property before they die. This is can help for people with complicated investments and many assets.
In addition to the initial costs, living trusts require periodic updating. For example, if someone buys a home and fails to add it to the living trust before death, the probate fees could still apply to that property. Some people automatically transfer their assets into a living trust at the end of each year, specifically to avoid such a problem.
Although some states do have complicated probate laws with significant fees and penalties, other states’ processes are easier to navigate. Many states have decided to forego probate fees altogether, which may make a living trust entirely unnecessary.
Living trusts are useful in specific circumstances, but they are certainly not beneficial for everyone. Legal and financial experts encourage their clients to fully examine their asset portfolio and individual needs before creating a living trust.
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