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The advantages and disadvantages of revocable living trusts

Many people in the Fresno are may swear by trusts as the best estate planning tool that a Californian can use with respect to estate planning. It is true that setting up and maintaining a trust carries with it several important advantages. However, as with just about any legal procedure, a trust is not necessarily right for everyone and should not be seen as a one-size-fits-all approach to estate planning.

By way of background, a revocable living trust is a trust a person or a married couple creates while they are still alive and well. They then put all or at least most of their property in the trust. Usually, the people who made the trust name themselves as trustees, or managers, of the property, thus keeping control over it. Moreover, because the trust is revocable, the people can terminate it at any time.

The biggest advantage to having a trust is the avoidance of legal proceedings down the road, specifically probate. As previous posts on this blog have explained, this does not mean that there will be no litigation over the trust; however, it can keep routine administration and transfers of wealth out of the courts. Moreover, if a family owns property in several states, a trust can also bypass the requirement that there be a probate proceeding in each state.

On other advantage to a revocable living trust is that it reduces the chances a person will need a guardian over his or her property later in life should he or she become incapable of making financial decisions. The reason is that the trust could name a successor trustee who is already prepared to step in the event the person who made the trust can no longer handle his or her affairs because of a mental or physical health problem.

The obvious disadvantage to a trust is the up-front cost of setting one up. Depending on how much property a person has and what type of property it is, the cost may or may not be worth it. Still, it is best to discuss such things with a qualified probate and estate attorney.

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