Fevurly has no real aversion to living trusts. What upsets him most
is the one-size-fits-all approach and the scare tactics used to sell them, too
often to the wrong people and for the wrong reasons. After all, in the past few
years the dreaded probate process has become much simpler, and in many states
the costs are insubstantial. Even for those people who live in states such as
California, Florida or New York, where probate costs are still based on a
percentage of the estate, a living trust may not be necessary if the bulk of the
assets are held in accounts that have beneficiary names specified, such as
defined contribution plans, individual retirement accounts or life insurance
contracts. Also, revocable living trusts do not offer any real asset protection
or income tax benefits.Despite this, living trusts do have real benefits for
people with sizeable or complex estates. When drafted well and correctly
maintained, living trusts can be useful financial and estate planning tools.
They provide an excellent means of avoiding probate in our state of residence as
well as in ancillary jurisdictions. But probate avoidance is just the beginning.
Many financial advisors and estate attorneys believe that the value of a living
trust can be apparent in the event the grantor is incapacitated, long before
death or probate becomes a consideration. Put simply, it is the most powerful
means of controlling our assets should we be struck by a disability that does
not prove fatal.
You Bet Your Life
“For anyone with substantial assets, I view a living
trust as a way to protect against disability,” says financial advisor Steven
Weinstein, with Altair Advisers in Chicago. A former attorney who years ago
worked in probate court, Weinstein now recommends living trusts to his clients
as a crucial piece of their estate plan. Studies have shown that a 20-year-old
worker today has a greater chance of becoming disabled than of dying before age
64. While a will takes effect only in the case of death, a living trust comes
into play in the event that the grantor becomes incapacitated, enabling the
successor trustee to continue to manage the assets under its guidance. In other
words, the grantor can retain control over how funds are dispensed before death
as well as after.
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