Common Myths of Estate Planning
What are the Common Myths about “Living Trusts?”
If I have a Living Trust….
I do not need a Will.
FALSE – even if a “Living Trust” is right for you, you still should have a Will. If some of your property is left out of the Trust, or if any portion of the Trust is invalid, a Will can ensure your assets are transferred consistent with your wishes.
My estate will not pay attorney’s fees.
FALSE – because transferring assets under a “Living Trust” will require accumulating assets and distributing them (and since taxes may be due), it is usually necessary to hire a lawyer to help administer the “Living Trust” after death. In addition, there are legal fees associated with preparing the trust document.
The assets will not be considered mine if I need to go to a nursing home.
FALSE – Because “Living Trusts” usually are revocable (meaning you can alter them during your lifetime), they will be considered your assets if you apply for nursing home benefits.
My estate will not pay inheritance or estate taxes since my estate won’t need to go through probate.
FALSE – generally speaking, any transfer of assets as a result of death will result in inheritance and possibly estate taxes being due. Thus, in most cases, property passing by a “Living Trust” will be subject to tax. Certain trusts, referred to as irrevocable trusts, may have tax advantages that other trusts can’t provide.
My assets automatically will be part of it and my Will will not have to be probated.
FALSE – Only property that you specifically list as part of the Trust will be part of it. If you own property individually and don’t include it in the Trust, your Will still must be probated.
“Living Trusts” – Unfortunately, some “Living Trusts” are marketed to senior citizens through high-pressure sales pitches that prey on the fear that assets will be tied up indefinitely or that estates are prone to heavy taxes and fees if a “Living Trust” is not in place. These marketing schemes try to convince consumers that a “Living Trust” is right for them even though many of the complex rules and fees that can complicate estate distribution do not exist in Pennsylvania. Victims can be sold self-help “kits,” costing several thousand dollars that are nothing more than standard forms that may not be valid under state laws.