This will be the first of a four-part series on why you need a living trust. I recently read an article from a well-known business publication that provided four reasons why you don’t need a living trust. In this four-part series, I will identify the reasons provided by the article and examine why those reasons are severely misguided and flawed.
~ You don’t need a trust to protect assets from probate ~
The article states that you can arrange your assets using alternative methods to transfer outside of probate. Common methods include: holding jointly owned property as joint tenants with rights of survivorship, beneficiary designations, “POD” (payable on death) or “TOD” (transfer on death) accounts, and beneficiary deeds, to name a few.
These planning methods are risky and should not be offered as sound estate planning advice. Here are a few examples to illustrate:
- If an asset is owned jointly with a right of survivorship, and the joint tenants die simultaneously, it will need to be probated.
- If a surviving joint tenant died without funding the asset into a living trust, or failed to find another joint tenant, it will need to be probated.
- If the designated person on a TOD, POD, or a beneficiary designation predeceases you, and you fail to update the account, the asset will need to be probated.
- If your designated beneficiary is a minor, or is declared mentally incapacitated at the time of distribution, the asset will need to be probated to determine a conservator and guardian for the beneficiary.
- If you use a beneficiary deed to transfer a piece of real estate upon your death, but the deed doesn’t get recorded properly or on time, or you live in a state where beneficiary deeds are not recognized, the real estate will need to be probated.
The above examples are only a few of the things that can occur when using the first method directed by the article. Please consult a qualified estate planning attorney to help you determine the best approach to your estate planning needs.
Contributed by Morris Hall, PLLC Phoenix Estate Planning Attorney, Darren L. Richardson.
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This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.