A Living Trust makes a big difference and before you say to yourself, “I know this and we’re all set”, take a moment and run through everything you want in your living trust and check to be sure it is!
I have seen so many people who know the value of this, buy a house, intend to put it in the living trust, and then forget. I see a lot of older people who have not properly set up their estates. Perhaps your parents might be in this place and they don’t know it.
Placing the property in a trust confirms title for a ‘stepped-up’ basis should one person pass away. (For instance, only half the property basis might get a ‘stepped-up’ basis if title is not held properly.) Below is a short summary about a living trust.
What is a Living Trust Anyway?
A living trust is a legal document created during your lifetime. Just like a will, a living trust spells out exactly what your desires are with regard to your assets, your dependents, and your heirs. The big difference is that a will becomes effective only after you die and your will has been entered into probate. A living trust bypasses the costly and time-consuming process of probate, enabling your successor trustee (who fills basically the same role as an executor of a will) to carry out your instructions as documented in your living trust at your death, and also if you’re unable to manage your financial, healthcare, and legal affairs due to incapacity.
Since the process of Probate can take up to 18 months or longer (and cost heirs thousands in attorney fees) anyone with beneficiaries should set one up.
The #1 reason people do not put a Living Trust in place is cost. Well drafted living trust documents, typically cost $2,500-$5,000 by experienced attorneys. Although this is a small fraction of an estate’s value, people would rather save the money.