As an estate planning attorney, I am asked the question by both clients and wealth advisors everyday in my practice, "Dan, is there really a need for a living trust in today's tax environment?"
As every attorney will tell you, "Well, that depends."
Whether a person needs a living trust or just a will is always going to depend upon the person's unique family situation, and what the family is trying to plan and protect for their family.
However, I will issue a warning to Tennessee families. Be Aware of the Living Trust Events Targeting Senior Citizens! There are many "living trust" salesmen and companies out there who use high pressure sales tactics on senior citizens. They usually come with the promise of a free dinner and a presentation on living trusts, and then the salesmen uses high pressure sales tactics to push the living trust that it will solve all of their estate planning needs and concerns! - Also, this is a statement that is coming from an attorney who routinely gives estate planning and living trust seminars multiple times each year! I have seen great living trust seminars and I've also seen terrible living trust seminars. There are very bad companies out there targeting seniors in this way, so please be on the look out!
There are a number of reasons why a family may need a living trust. This could include:
- Protecting your assets from nursing home expenses and long term care costs
- Keeping the financial affairs and estate settlement process private
- Keeping the government out of your family affairs
- Protecting your children's inheritance from creditor claims, divorce claims, lawsuits, and themselves
- Protecting your IRA for your children - and making your children IRA millionaires
- Planning due to having a special needs child
- Being in a second marriage and avoiding "accidental disinheritance" of your children
- Protecting the 100% step up in tax basis for your surviving spouse
- Engaging in charitable planning and giving
- Limiting your estate tax exposure
- Any many other reasons
However, as I tell nearly every client, living trusts are not for everyone. Sometimes it just doesn't make sense for a client of mine to set up a living trust. There have been many occassions where I have had clients come into my office to establish a living trust, and after looking at their family and financial picture, it just didn't make sense for them to do so. In those situations, I simply recommended a last will and testament and disability legal documents (living will, healthcare power of attorney, and durable power of attorney).
If you have questions about living trusts, and wondering whether they might be the right decision for you and your family, please contact us to discuss your concerns. As always, we are here to help!
If you'd like to learn more about living trusts, you can download a free report that I have written on estate planning or you can register to attend one of our educational events. The simple download and registration forms are on the upper left part of your screen.
We look forward to hearing from you soon.
Daniel A. Perry