Today you often hear that a living trust is better than a will for disposal of your propery at death. You may have seen slogans such as "A Will is not the Way" or "Where there's a Will, Heirs Pay".

A well-prepared living trust can be an efficient and economical means of estate planning for some people. For others, the use of a will is the better choice. In some cases, neither a trust nor a will is needed. You should obtain competent legal advice regarding the best method for disposing of your property.

A living trust is a document in which ownership of your property is given to a certain person or institution(e.g., a bank), known as the "trustee". The trustee becomes the owner of your property as trustee of your trust. Typically your trust would name yourself as initial trustee of your living trust, and would provide for a successor trustee upon your incompentency or death.

A living trust is fully revocable. This means that, so long as you remain competent, you can cancel the trust and once again become the owner of the property which the trustee had owned. There are many other types of trusts besides the living trust. Only the living trust is discussed in this article.

The trust document tells the trustee what to do with the trust property, both during your lifetime and after your death.

Your trust likely would instruct the trustee to use the trust property for your needs while you live.

Upon your death, the trust functions in a manner similar to a will. The docment instructs the trustee to dispose of your property in a certain way. For example, a trust for a couple with adult children might simply provide that the trustee is to use his judgement in dividing the trust property equally among the children. A trust for a husband and wife with minor children might provide that, upon the parents' deaths, the trustee or one of the children's adult relatives would hold the trust property in trust for the benefit of the children.

Probate is the court procedure in which a guardian is appointed if you become incompetent, and in which your estate is administered after your death. A living trust can be a means of avoiding the time, expense and publicity of either, or both, of these probate procedures.

In order to achieve these goals the trust must be drafted and carried out properly. A trust designed for your particular needs by a competent lawyer is far superior to a standardized trust form. Trusts advertised in the media are often sold by out-of-state companies with mostly non-laywer personnel on their staff.

A well-written trust will take into account potential future happenings which otherwise might upset your estate planning (one example, among others--a provision for your minor grandchildren in the event one of your chlidren dies before you).

Trusts generally involve substantially more up-front expense than a will. They are somewhat cumbersome. For example, your bank accounts, investments, etc. are now titled "John Smith, as trustee of the John Smith trust" rather than simply "John Smith".

There are potential problems with trusts. At times people and institutions are reluctant to recognize them.There may difficulties in getting the trust property transferred to your beneficiaries after your death. For example, probate sometimes is a more efficient procedure than a trust to clear title to land such that it can be sold. A trust, like a will, can be contested in court after your death.

You should be aware that probate administration after death is not always a cumbersome procedure. It can often be completed in less than a year without great expense, provided your heirs and any other beneficiaries are cooperative with each other.

If you establish a trust it is usually advisable to transfer most, or all, of your property to the trust. If significant items of property are not put in the trust, probate may still be needed to transfer ownership of those items upon your death.

In most cases it is advisable to do a "pour-over" will and durable power of attorney in conjunction with your living trust. The "pour-over" will is designed to put property into the trust at your death which you forgot to put into the trust during your lifetime. The durable power of attorney allows another person (e.g., your trustee) to manage your affairs if you should become incompetent. Your trust likely would provide for such management, but generally powers of attorney are more easily given recognition by the public than a lengthy trust document.

Copyright (c) 2011, Jim Carfagno, Jr., P.A. All rights reserved.