Long-Term Care Planning: Pros and Cons of Living Trusts

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In many families, even when planning the long-term care of a loved one, money is a taboo topic. Talking about bank accounts, wills, or trusts happens only when a crisis occurs. To prevent conflict and confusion, planning long-term care should include planning for wills and trusts.

Living trusts have the following advantages:

  • If you become disabled and you have named someone as a successor trustee, the trust provides a way to manage the assets placed in the trust.

  • A trust is a private document and does not become public as does a will.

  • A trust is easy to change.

  • Assets in the trust do not go to probate.

There are, however, some potential problems.

  • You have to remember to transfer legal title to the assets you want to be held by the trust.

  • Just like a will, you have to remember to update the living trust in case of a life-changing event. The person named as beneficiary may now be an ex-spouse.

  • Having a trust can affect your eligibility for Medicaid or other benefits.

  • Because the management of a living trust is outside a court's jurisdiction, there is no oversight, which means no probate court costs but also no supervision in case of disagreements. You could go to all the trouble of creating a living trust and still have your estate wind up in court.

Be wary of salespeople who pitch kits that promise to include everything you need for a living trust — at a cost of several thousand dollars. They take the money and run, or give you a document that does not fit your circumstances and may not even be valid in your state.

Several states have filed consumer fraud actions against these con men. If you or a parent is really a good candidate for a living trust, you need competent legal advice from an experienced lawyer in your community. The “free lunch” session on how to avoid probate with a living will kit is going to cost you.

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