A living trust is a popular estate planning document that comes with many benefits. The document allows you to have more control over your assets, maintain your privacy and avoid probate. However, you might have heard misinformation about living trusts that are making you more reluctant to establish one.
Here are some common misconceptions about living trusts that you shouldn’t believe.
Living Trusts Are Only for Rich People
This is one of the most common myths about living trusts. Many people assume that you have to be a millionaire to have one. It just is not true. Even if you have a modest income, you can still benefit from creating a living trust. If you want to be able to manage your assets while you are alive or have more control of who receives your assets, you may consider setting up a trust.
Living Trusts Protect Property from Creditors
Another common misconception about a living trust is that it prevents creditors from taking your assets. Since you can revoke your trust during your life, creditors can still make claims against the assets in the trust.
It Is Too Expensive to Set Up a Living Trust
Some people shy away from creating a living trust because they think it’s too costly. Although it does cost more money upfront to set up a trust than a will, the document offers many benefits and may help you save more money in the long run.
Living Trusts Only Benefit Beneficiaries
It’s true that living trusts offer many benefits for beneficiaries, including passing down property quickly after the grantor’s death. However, a living trust can also be beneficial for the grantor. A trust allows you to specify how to handle your financial and health affairs if you should become incapacitated during your lifetime.
Living Trusts Are Only for Financial Securities
It is commonly assumed that living trusts can only hold financial securities, like mutual funds, stocks and bonds. However, as a Knoxville, TN trust lawyer from Carpenter & Lewis PLLC can attest, trusts can actually hold many other assets, including homes and art. For example, you might choose to put your home in a trust so that it avoids probate.
If You Have a Will, You Do not Need a Trust
Even if you have a will already in place, you can still benefit from creating a living trust. For example, if you want to give assets to a family member who is not financially responsible, you may consider setting up a trust. It will allow you to distribute assets in increments, rather than all at once.
You Should Name a Family Member as Trustee
Many people appoint a family member as trustee of their living trust. This may not always be a good idea. It can damage family dynamics and make things more stressful on anyone. Think about appointing an independent third party as your trustee to minimize issues.
If you need assistance with your living trust, schedule a meeting with a trust attorney today.