Although living trusts offer an effective estate planning option, some people are unaware of what information they need to make a preliminary determination about whether it is an appropriate estate planning tool to meet their needs. While the most effective approach to having one’s estate planning needs assessed is to seek legal advice from New Mexico Attorneys with experience in estate planning issues, we have provided some factors that may help you determine whether to consider a living trust.
Probate Is Not Necessary for Many Types of Assets:
One important consideration when evaluating your need for a living trust involves identifying the types of assets that you possess. While a key function of a living trust is to avoid probate, there are a fair number of assets that may not need to go through probate. Life insurance benefits, retirement accounts and residences held in joint tenancy will pass to the designated beneficiary or joint tenant (often a spouse or domestic partner) regardless of whether a decedent has a will or living trust. If these types of assets constitute the bulk of a person’s estate, it is possible that a living trust will not provide enough benefit to justify the cost. However, there are other benefits to a living trust besides probate avoidance so it is best to obtain legal counsel before deciding that your assets do not merit creation of this estate planning device.
Living Trusts Need Updating to Be Effective:
If you are considering a living trust, it is important to recognize that you must continue to transfer assets into the living trust so that it is effective. When assets are not transferred into the trust, they may proceed through probate so the value of the living trust might be diminished to some degree.
Small Estates May Not Merit a Living Trust:
Depending on the value of an estate, a living trust may not be necessary because an expedited probate option may be available. When the net assets of an estate amount to less than $50,000 in net value, probate may not be necessary. There is an expedited process that involves filing a small estate affidavit which is fast and efficient and may constitute a favorable alternative to a living trust for estates with a relatively modest net value.
Living Trusts May Not Offer the Right Mix of Benefits:
Many people do not want to surrender ownership and control of their assets so they are unwilling to consider an irrevocable living trust. While use of a revocable trust may permit you to change your beneficiaries or even terminate the trust, this continued control over your assets also comes with disadvantages. For example, the living trust will not provide the benefit of placing the assets beyond consideration for Medicaid eligibility because the settlor of the trust has not permanently relinquished control over the assets. A living trust does not make sense unless it can provide the right mix of benefits that an individual is seeking without adverse consequences that the person is unwilling to accept.
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.
If you are trying to determine if a living trust provides a prudent estate planning option for someone in your situation, our New Mexico Attorneys at Life Leaf Legal Group, PC offer a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your specific situation. Call us today to schedule your free consultation at (505) 856-3591 to learn about your rights and options.