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.