You have heard the positive side of The Living Trust, but many are asking, "What are the negative aspects of a Living Trust?" There are basically two negative issues that are commonly stated. First is the cost to establish a Living Trust. The second is the effort required to go through a complete transfer of assets that can take 30 to 90 days. Both of these observations are true. Generally the fees involved in drafting a Living Trust document will be double the cost of an ordinary Will. With a Will, however, you get a bonus...you get to go through Probate! You should not only count the cost to BEGIN an Estate Plan, but also include the FINAL costs to go through the settlement of your estate at death. When you add in the costs of Probate and legal representation, Gift Tax, Capital Gains Tax, and Federal Estate Taxes, the cost of the Will is universally more expensive. . . by tens of thousands!
When the issue of the effort to establish and fund a Living Trust is brought up in comparison to a Will, the cost difference becomes staggering. The minimal time spent in preparing a Living Trust can hardly be compared to the costs, delays, complications, and legal hassles of going through Probate. The average length of time to go through Probate is well over a year, according to AARP’s Modern Maturity Magazine.
The only other problem that may occur is a poorly-prepared Trust. Ironically, few attorneys are adequately knowledgeable in this specialty. Most attorneys were taught to do Wills. You are encouraged to seek assistance from well-established advisors who specialize in Living Trusts. The attorneys involved with the Heritage Trust are carefully screened, well-versed, and up-to-date on Trust Law.
Loss of Control
Another common question is, "Will I lose control of my assets in a Living Trust?" The answer is unequivocally, "NO!" As the Trustee of your Living Trust, you have all the same powers that you now have as the current owner of your assets. With a Living Trust you can buy, sell, or gift away assets in any fashion that you could before forming your Living Trust. In many cases, the establishment of a Trust has given you more organization and better control of your assets, since it involves an Estate Plan.
Finally, a Living Trust does NOT require any new tax forms or added tax filings. You will file and pay taxes in exactly the same manner as you did before you had a Trust. It should be noted, however, that a Living Trust provides NO liability or income tax benefits, nor does it give any protection against the Medicaid spend-down until 5 years after it is funded and even then the protection is weak on that point since Congress is constantly trying to close the Medicaid gap
