What Is a Living Trust Review?
A living trust is a legal document that assigns an individual’s asset to a trustee who oversees the trust for an eventual beneficiary.
The trustee is responsible for managing all the finances in the trust during the individual’s lifetime and assuring that the beneficiaries receive their bequeathed assets.
A living trust is not a living will, so it does not have to clear through courts after a person’s death. The living trust can also be a beneficiary itself, receiving income from employer-sponsored retirement plans and 401k contributions. These assets can then be given to living beneficiaries after the trustor, or grantor, passes away.
Here is an article about living trusts and how they work.
When Should You Review a Living Trust?
Conducting a living trust review every 3 to 5 years or after any significant life milestones impacting the beneficiaries is advisable. Generally speaking, reviewing your entire estate every few years is a good idea, ensuring your documents align with your current wishes.
You might also want to review your living trust when your assets change and make modifications. Life events also play a large role in living trusts. You might want to review your living trust after:
- A child is born or adopted into the family
- A beneficiary passes away
- A beneficiary marries or divorces
- You decide you want to add or disinherit a beneficiary
- You acquire new property that you want to add to your trust
- You’ve moved to a new state with different inheritance laws
- You or a beneficiary have changed your legal names
- You have a revocable living trust and want to change it
Here is an article with more details on choosing a will or revocable trust for your beneficiaries.
Pros and Cons of a Living Trust
In addition to understanding how a living trust functions, one must understand the pros and cons of having one and how they may affect you and your beneficiaries.
The Pros of a Living Trust:
- No Need for Probate.
There is a probate period before your assets are distributed when someone passes away. However, a living trust allows your assets to be distributed immediately after death.
Because your assets are held in trust and not by your estate, it cancels out the probate period. Probate can take up to two years, often due to family members contesting the will. During this time, assets are inaccessible.
With a trustee, you will not have to worry about your beneficiaries receiving their assets. This can bring immeasurable peace of mind for an individual with children, elderly parents, or loved ones with disabilities.
- Your Trustee Can Assume Responsibility.
Your trustee can assume responsibility. Whomever you designate as a trustee can also step in and handle your assets if you cannot do so. For instance, if you are involved in an accident and cannot handle your assets, your trustee can take over responsibility without having to gain court permission.
- Control Over Property Distribution.
Like a will, a living trust determines what will happen to your assets in the event of your death. You can create trusts under your living trust that are implemented according to your wishes.
An example of this would be you creating a trust for a minor, which would become accessible once said minor becomes a legal adult.
- Maintain Privacy
The probate process is open, meaning anyone can access the public record. When you have a living trust, you can maintain the privacy of yourself and your family. Your financial assets and property will not be searchable by the general public.
The Cons of a Living Trust:
Although there are many advantages to having a living trust, there are several cons.
- Title Transfer
Setting up a trust is not difficult; however, you must ensure that any assets you include are properly transferred to the trust. Some assets, like jewelry or furniture, do not require a title transfer. This can be done by creating a document that outlines ownership rights.
Other assets, like real estate, must be completed with a transfer of title.
- Cost.
Title transfers require additional paperwork, which also needs paying filing fees to register the documents legally.
If you have multiple title transfers, you may want to work with an experienced estate planning attorney who can take care of the filing. However, attorney fees are separate from filing fees, so you must account for those.
Here is an article with more details on the difference between a will and trust and which one might be right for your family.
What Assets Should Be Included in a Living Trust?
Any assets you would like to bequeath someone through a will should also be in your living trust. This can include:
- Property titles
- Financial accounts
- Sums of money deposited into the trust
You can make contributions to the trust, as well as make the trust a beneficiary for your estate. For example, money from a life insurance policy can go to a trust.
Here is an article with more details on what assets can go into a revocable living trust.
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Is a Living Trust Better Than a Will?
Some individuals prefer trusts because they are easier to transfer than wills. In addition, the management of family trusts tends to be more flexible and easier than maintaining a will.
The settlement process for wills also takes much longer than a living trust. Additionally,
assets transferred through a living trust may also have fewer costs and tax obligations than assets inherited through a will.
Here is an article about the pros and cons of trusts vs. wills.
What Type of Lawyer Can Review a Living Trust?
A trusts lawyer can review your living trust and any last will and testament you have as part of your estate. A trusts lawyer creates trusts on someone else’s behalf, and they can handle all of the documentation.
Whether you want to leave money or belongings to a loved one, working with a trusts lawyer is the easiest way to ensure that your assets go where you want them after you pass on.
Another reason to work with a trusts lawyer is lower estate taxes. Through careful planning, you may be able to limit your beneficiaries’ tax responsibility. But, ultimately, it will depend on the assets you include and how your plan is structured.
Here is an article about trusts lawyers and what they can do for you.
How Much Does It Cost to Review a Living Trust?
ContractsCounsel's average cost to review a revocable living trust is $1,500 to $2,500 across all 50 states. You may pay a fixed rate for a lawyer’s services, or you might pay per hour. Hourly pay for a trusts lawyer ranges from $250 to $350 per hour.
Here is an article with more information about living trust review costs and the average price of a trusts lawyer.
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