What is a Living Trust?
A "living trust" generally refers to a trust which a person establishes during his or her lifetime and which may be revoked or amended at any time by the person establishing the trust. The person who establishes the trust is often referred to as the "grantor." In a typical living trust arrangement, the grantor also serves the trustee of the trust during his or her lifetime. Thus, in effect, the grantor controls all aspects of the trust as long as he or she is living.

A living trust is typically funded during the grantor's lifetime with all or a portion of the grantor's assets. A funded living trust is sometimes referred to as a "revocable living trust." An unfunded living trust is sometimes referred to simply as a "revocable trust."

A living trust is generally viewed as an alternative to a traditional Will. Like a Will, a living trust may be used as a method of distributing your estate to your family members or other persons when you pass away. Many people find that a living trust offers many advantages over a traditional Will. In addition to its many benefits, a living trust also has many drawbacks. You should carefully consider the pros and cons of establishing a living trust before making the decision to do so.

Should I Have a Living Trust?
Many proponents of living trusts present this technique as one which offers a multitude of advantages for virtually everyone. While it is true that a living trust offers many advantages, it is just as true that there are many drawbacks and many of the advantages of such a trust are misrepresented or simply misunderstood. The merits of a living trust should be carefully evaluated in light of the circumstances and needs of each individual.

Benefits of Living Trusts:

• A living trust allows you to avoid the estate administration procedures typically associated with a Will. This process is commonly referred to as "probate." By avoiding probate, you avoid the court filings, bond requirements, and probate fees required by the court.
• A living trust not only avoids probate in the county and state where you live at your death, but is also allows you to avoid probate in any other state or county where you own property. This form of probate is referred to as "ancillary estate administration." If you own property in several counties or several states, a living trust may be very beneficial.
• A living trust allows you to keep your estate plan private. A Will is filed with the Clerk of Court at your death and thus becomes available for public inspection. A living trust is not typically required to be filed or recorded with the court.
• A living trust provides a very effective method of managing your property during your lifetime without the need for a court-appointed guardian. Since a living trust is funded with all or a portion of your assets during your lifetime, the trust agreement contains specific provisions for the management of your property as long as you are living. If you become unable to manage the trust property as the trustee, the successor trustee named in the trust agreement will assume the trustee's responsibilities and manage the property for your benefit and the benefit of any other beneficiaries you choose to designate.

Problems with Living Trusts:

• While avoiding probate is one of the most popular features of a living trust, it is important to understand exactly what is being avoided. Probate exists for the protection of your heirs. By establishing an open and orderly method for identifying your assets, paying your estate expenses, and distributing your assets, the court ensures that your heirs receive their proper share of your estate free of creditor claims. If an executor acts in an improper manner, the court is able to discover the indiscretion and replace the executor or take other necessary steps to remedy the problem. By avoiding this probate procedure, your heirs may be left "in the dark" with limited access to information regarding the administration of the trust after your death. If the trustee delays the distribution of your assets or acts in an inappropriate manner, your heirs may be forced to file a lawsuit to remedy these problems. Also, by avoiding the probate procedures, any claims of creditors may remain open and unresolved after the distribution of your assets to your heirs. Your heirs may be sued by these creditors in order to recover any outstanding sums owed to creditors.
• In order to avoid probate, you must transfer all of your assets to the living trust prior to your death. This can be a costly and time-consuming process. Not only must you execute new deeds for your real estate, re-title your vehicles, and change the ownership of your banking and investment accounts, you may also need to revise the beneficiary designations on your life insurance policies and retirement assets. You must also maintain all of your assets in the name of your living trust even as your acquire additional assets in the future.
• Even if you avoid probate, your trustee will still be required to carry out many of the same steps that an executor would be required to perform under a Will. For example, the trustee should still identify the trust assets, pay your estate expenses and outstanding claims, file your final tax returns, and distribute the trust assets according to the terms of your living trust. In many cases, there may be little practical difference between the administration of your living trust after your death and the administration of your probate estate under your Will.
• The fees and expenses associated with establishing a living trust may exceed the savings which a living trust offers by avoiding probate. Not only are the legal fees incurred to establish a living trust usually more than those required to establish a simple Will, but you must also incur expenses associated with the transfer of your assets to the living trust.
• Because it is revocable, a living trust does not offer any estate tax advantages or benefits, and since you are considered the owner of the trust assets during your lifetime, there are no income tax advantages or benefits. Beware of living trust proponents who suggest that a living trust offers you any tax benefits. Though it is possible to include certain tax-saving provisions in a living trust, these same tax-saving provisions may also be included in a Will.
• A living trust is not the only method available to avoid or minimize the probate process. Other asset management techniques which are not as costly and complex might also be considered. For example, you might consider re-titling your assets into joint ownership with rights of survivorship to ensure that the assets pass outside of probate when you die. You might also consider executing a durable power of attorney for the management of your property during your lifetime if you are unable to manage the property yourself.