THE use of a revocable living trust is often touted as a way to avoid the time and expense of probate — and, by some, as a way to lower taxes — when leaving a house and other living trust agreement to heirs. But does a living trust live up to its promise? For most people, there is probably no reason to make a revocable living trust,” said Ralph Engel, a Manhattan trusts and estates lawyer. Engel said a living trust is a legal device — created by a document known as a trust agreement — that acts as a holding bin for property and other assets.
Typically, he said, the trust takes title to a grantor’s property and gives control to a trustee. In many living trusts, the grantor names himself the trustee,” Mr. Engel said, adding that the trust agreement also specifies what happens to the assets on the grantor’s death. But does creating a living trust avoid probate? He said that when property is transferred to heirs using a will, the will is generally subject to probate.
Probate is a proceeding in which a judge declares a will to be valid and appoints the individual responsible for handling the administration of the estate,” Mr. By law, however, certain property, like life insurance with a named beneficiary, is not subject to probate. An asset in a trust, he said, is that kind of property. So, he said, if all of a person’s assets are in a living trust, they pass to beneficiaries without being subject to probate. While that might sound good at first, Mr.
Engel said, two issues should be considered. First, the individual creating the trust must be diligent in transferring title to all assets to the trust, including those currently owned in his or her name as well as those obtained in the future. Second, he said, in the vast majority of cases, probate isn’t nearly as expensive, complicated or time-consuming as most people think. Unless there are problems with the estate, the probate process typically takes only a few weeks,” he said, noting that New York, New Jersey and Connecticut have fairly uncomplicated probate procedures. Please verify you’re not a robot by clicking the box. You must select a newsletter to subscribe to.
You agree to receive occasional updates and special offers for The New York Times’s products and services. You are already subscribed to this email. View all New York Times newsletters. Although literature and advertisements promoting living trusts sometimes state they can save taxes, in fact, they save no taxes at all compared to an estate plan in an appropriately drafted will,” he said. Jonathan Forster, an estate-planning lawyer in Washington, said that while revocable living trusts are not necessary for most people, they might make sense sometimes.