Take a Closer Look at the Living Trust

Some attorneys say a livingtrust is essential. Other attorneyssuggest that living trustsshould rarely be used. So who's correct?The real answer actually liessomewhere in the middle. There areboth significant advantages and disadvantagesof the living trust. Byexamining them fully, you will be in abetter position to determine if a livingtrust is appropriate for you.

KNOW YOUR ADVANTAGES

Even before you talk to yourfinancial consultant, it's a good ideato know the advantages a living trustoffers. Following is a list of the 3most important advantages your livingtrust will provide for you:

• Probate. The most often citedreason for setting up a living trust isto avoid the probate process. Probateis a legal process whereby the probatecourt supervises the transfer of adeceased person's assets to theirrightful heirs. This is a public processand even the simplest of estates maytake at least 6 months to settle.

• Privacy. Because property thatis placed in a living trust is not subjectto probate, your records are notmade public. Many people prefer tokeep their financial matters out of thepublic eye. A living trust is an excellenttool if this is your objective.

• Legality (across state lines). Ifyour work causes you to move fromstate to state, your living trust removesthe necessity of having to drawa new will every time you changeyour state of residence.

REALIZE DISADVANTAGES

Don't start preparing your livingtrust just yet, however. There aredisadvantages to having a livingtrust. The following is a list of 3 disadvantagesyou will encounter whenyou establish a living trust:

• Costs. There is a drafting costand a cost for transferring propertyinto the trust that opponents site as 1reason to avoid living trusts.

• Time and trouble. Time andeffort must be made to move yourproperty into your trust (eg, youmust locate all your property deedsand titles, write letters to your banks,brokerage firms, and employee benefitsoffice). And every time you purchaseproperty or open a new bankaccount, you must remember tomake your trust the owner.

• Divorce. If you get a divorce,your living trust will not automaticallyremove your ex-spouse as apotential beneficiary (whereas withwills, an ex-spouse is automaticallyremoved). You will need to makesure to amend your trust in order toremove your spouse.

Ultimately, the final decision ofwhether to use a living trust vs a willdepends on your individual circumstances.Consult your attorney orfinancial advisor to see if a livingtrust is right for you.

Stewart H. Welch III, founder of

the Welch Group, has been

rated one of the nation's top

financial advisors by Money,

Worth, and Medical Economics.

He welcomes questions or

comments from readers at 800-709-7100 or

www.welchgroup.com. Reprinted with permission

from the Birmingham Post Herald.