Reasons you don’t need a living trust

While no one likes to think about their own mortality, having an estate plan in place can offer you peace of mind knowing that your finances will be properly managed and that your family will be taken care of.

Two useful tools that are used in many estate plans today are a last will and testament and a living trust. Many financial advisors will tell you that not everyone needs a living trust as part of their estate plan. This is generally true if you are single, have no children, or have little or no assets. In these types of situations, a will may suffice. But, what about probate?

If you are married, and you and your spouse are planning to leave the majority of your estate to one another, you do not have to worry about having to go through the probate process at an early age. You can consider adding a living trust to your estate plan down the road. 

If you’re a middle-income person in good health and are under that age of 55 or so, you can always consider a living trust in the future or take advantage of some of the newer probate avoidance techniques that have been gaining acceptance over the past decade.

However, what are some of the reasons you would need a living trust as part of a complete estate plan?

And reasons you do need a living trust

Many people are under the impression that to establish a living trust the value of their estate must exceed $5 million. Not true. A living trust can be established at any income level, but you would want to seriously consider creating one as part of your estate plan if you:

  • Own a family business
  • Own property in more than one state
  • Have assets in excess of the threshold amount prescribed by California, which is currently $166,250 
  • Have minor or special needs children and/or children from more than one relationship

A living trust allows loved ones to avoid probate after your death. Depending upon the size of your estate, probate can be very time-consuming and expensive. Transferring assets to your beneficiaries via a living trust exempts them from probate, thereby saving your beneficiaries from having to undergo the hassle, confusion, and time involved in the process. And, if your estate is subject to federal taxes, proper advanced planning may provide you with tax benefits. 

Having a living trust in place can help you to avoid conservatorship if you become incapacitated and cannot manage your financial affairs. Your trustee can step in on your behalf. And you can leave specific instructions in your living trust for leaving assets to minor children, such as when they can receive their inheritance.

Setting up a living trust for your family

Does everyone need a living trust? The simple answer is “no,” but if you have questions as to whether you and your family could benefit from establishing a living trust, contact the Law Office of David W. Foley, California estate planning attorney.