Pros & Cons #2: Trust-Based Plans

This part 2 of a series discussing the difference between will-based and trust-based plans. As an estate planning attorney, I often get asked to outline the key differences between having a will-based plan and having a trust-based plan. In this section installment, I will cover the pros and cons of using a trust-based plan.


For purposes of this comparison, we are only addressing the Revocable Living Trust (RLT). There are many other types of trusts, including those which are created to be irrevocable. These other types of trusts will be covered at another time.


Pros

  • Takes effect immediately.

  • Can easily add and remove assets throughout your lifetime.

  • Avoids Probate Court, if properly funded.

  • Provides incapacity planning.

  • You can name a trustee who specifically handles your affairs during any period of disability.

  • You can prioritize payments and support during any period of disability.

  • Protects family assets by making a clear plan for their disposition.

  • Can minimize family conflict over assets.

  • Can protect assets from spouse remarrying.

  • If you have a taxable estate, trust-based plans can be structured to minimize estate taxes.

  • Here in Georgia, we do not have a state-level estate tax. Your estate will not owe any money to the State of Georgia based solely on the size of your estate.

  • At the time of writing, the federal estate and gift tax exemption is $11.7 million per individual and $23.4 million for a married couple. With these kinds of numbers, the majority of our clients have little to no risk of estate tax exposure.

  • Protects assets going to children from bankruptcy, divorce, lawsuits and creditors.

  • Can provide planning for children or other beneficiaries who are disabled or have means-tested government benefits (or may become eligible for such benefits in the future).

  • Provides trustee with immediate access to trust resources to be able to pay funeral expenses and other end-of-life costs without having to wait to be granted those powers by the Probate Court.

Cons

  • More costly to set up and design.

  • Have to retitle assets, deeds, and change beneficiary designation forms.

  • Takes time to design.

  • Additional costs (sometimes) for funding the trust.

There is no "one size fits all" approach to estate planning. To have a detailed discussion about your specific circumstances, call to make an appointment today. Protect Loved ones & Assets Now -- Have a P.L.A.N.(sm).


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