10 Powerful Reasons for a Living Trust

Estate Planning News Flash – 10 Powerful Reasons for a Living Trust 

By Attorney Paul Hanks Ironclad Living Trusts 

Death is a certainty and estate planning a must. As a longtime estate planning attorney part of my job is to educate others on the reasons for having a living trust rather than merely a will. A revocable living trust is a powerful estate planning tool and in this week’s release I am happy to comment on the many upsides of a living trust. 

The Trust as the Ultimate Probate Avoidance Device

Probate hovers overhead for anyone without a sound estate plan. Let’s take a real life example of a homeowner who ignores a trust and instead tries to pass their home through a will. If that homeowner who resorted to a will is a single person, probate is a guarantee. If that person opted for the California Revocable Transfer on Death (TOD) form, then beware of the many shortcomings as explored in another blog on this site. Now let’s turn to married couples who hold title to their home jointly. Many married couples do not realize that a spousal petition may need to be filed in the Superior Court upon the death of the first spouse. Many spouses also overlook tax basis issues and do not realize that some forms of home ownership create a capital gains tax issue that a trust would avoid. 

The Risk of Adding a Child to Title on the Home Instead of Having a Living Trust

Some people decide to try to save the modest cost of a trust by adding an adult child to title. Adding your child to title on your home could be the worse estate maneuver of all time. Your home could become subject to that child’s debts. Your home also remains at risk of Medicare estate recovery. Adding a child to title on your home could also jeopardize your home loan, and it becomes more problematic to refinance. The addition of a child to title on your home can also alter the tax basis and lead to a capital gains tax. Even property tax resets can occur when adding a child to title on a home. 

Married Couples Holding Title Jointly to their Home – the Many Downsides 

Married couples often mistakenly assume that holding title to their home jointly is a cure all. Multiple issues can arise by way of jointly held home ownership between spouses. Many spousal deeds which this attorney has examined create a capital gains tax risk. Many other marital deeds require the filing of a spousal petition upon the death of the first spouse. Another big problem with jointly held home ownership between spouses is the total absence of any agreement between the spouses setting forth their estate objectives for the home after the death of the second spouse. Without a marital trust in place the surviving spouse can do whatever they want with the home, and often that is adding a new partner in life to title on the home. Without a trust in place the surviving spouse can also sell the family home and squander the proceeds in any fashion they desire. 

Your Unexpected Accident or Disability Will Consume Your Estate Without a Trust

A trust is much more about death. A trust is also about your incapacity and protecting your estate from the threat of long-term care expenses. Unexpected illness and debilitating accidents are common and it is not wise to go through life hoping it does not happen to you. If you succumb to long term illness or you are involved in a severe injury accident, a trust should be in place with provisions regarding incapacity and conservatorship.  

Your Adult Child is a Reckless Spender

We love our children but often they are not perfect. Parental concerns often arise in estate planning regarding the reckless spending habits of their children. The last thing a parent wants to do is to leave their estate to a child who will waste their inheritance. A trust can set forth preservation strategies for the careful management of a child’s inheritance who may otherwise spend it on frivolous or materialistic items. Protective inheritance trust provisions can be a very powerful estate planning feature. 

Protecting Your Estate from In-laws and Other Opportunistic People

One thing that your son-in-law or daughter-in-law may cast their eyes upon is your wealth. In another blog this attorney commented on the power of a living trust to completely eliminate the risk of depletion of your estate and protecting your estate from opportunistic in-laws. 

Secure the Generational Passing of Your Estate 

Do you want your estate to end up with a stranger who you never knew before you died ? If you are married do you want your estate to pass on to your next generation ? If you want the guarantee of the generational passing of your property, then secure your estate in a living trust.

Strategies for a Disabled Beneficiary

Sadly it is not uncommon for a child to have a physical or emotional disability. Such a disability could arise upon birth or years later. If a beneficiary of your estate is impaired by a disability, a trust is an absolute necessity to protect both the estate as well as that beneficiary’s right to government assistance programs. In another blog this attorney commented on the strategy of a special needs trust as a powerful vessel for the careful management of an estate share allocated to a disabled beneficiary. 

Elder Protection Against Financial Predators

The elderly are at great risk of financial predators in our society. The elderly are a very vulnerable population and without a trust in place the assets of an elderly person are at great risk. A living trust provides an insulating layer of protection against scam artists seeking to take advantage of the elderly. 

Disinheritance Strategies 

In the experience of this estate planning attorney it is not uncommon for my clients to express a desire to disinherit a child. One fact of life is that sometimes a parent’s relationship with a son or daughter is very poor. Disinheritance strategies should be very carefully implemented. The laws in California have changed dramatically and proper trust provisions are crucial for dealing with disinheritance situations. In another blog this attorney commented on the myth of the $1.00 disinheritance clause. Disinheritance is a very delicate area requiring highly customized trust drafting. 

Would You Like a Free Consult With an Estate Planning Attorney in California?

If you wish to speak with an experienced estate planning lawyer, please contact online or call us directly at (951) 587-3737. Ironclad Living Trusts is honored to serve clients throughout all of Southern California.