Monday, March 15, 2010

AARP gives a quick checklist on living trusts


AARP Magazine has an interesting column in the March/April issue, 2010, p. 26, “The Truth About Living Trusts”, link here.

The plusses are “convenience” and “avoiding probate”. The minuses are the lack of tax reduction and hefty legal fees to draw them up (compared to wills). Probate is not difficult in all states. Many items (like life insurance death benefits) don’t get probated and don’t need the trust vehicle. The article makes one alarming statement: “And despite living trusts, many estates end up going through probate because some asset intended for a trust was never transferred to it.”

Does that mean that if another bank account or mutual fund or treasury note that the secondary trustee (essentially the heir) did not know about turns up in the mail, the whole estate has to be probated? That makes no sense. Many times adult children find that elderly parents have assets hidden away that turn up later, that the children never knew about. A trustee can only transfer what he or she can find out about. It is usually desirable to place the deed for a home in a trust (with your local government).

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