Some pros of living trusts are that they allow families to avoid probate court after the death of a decedent, and they provide tax benefits to reduce overall taxes on the decedent's estate, notes Legal Match. However, living trusts may not cover an entire estate and they have a confusing structure.Continue Reading
One of the biggest benefits of living trusts are that they allow for the easy transfer of assets after the trust owner dies, notes Legal Match. By allowing beneficiaries to avoid probate court, the confusion, costs and time of probate court is avoided altogether. In addition, much of the tax burden normally associated with a deceased's estate is avoided, so the beneficiaries do not owe as much to the government and get to keep more of the estate.
There is also more privacy surrounding a living trust than a typical will. Standard last will and testament documents are public record. Living trusts are not. Moreover, a living trust affords legal protection that ensures that the deceased's wishes are followed. Challenges to a living trust are met with trust documents that prove the clear intent of the decedent, making them difficult to challenge.
On the negative side, living trusts are complex instruments that require the help of an attorney to create. The attorney must also create a power of attorney in most cases for the living trust. The power of attorney is necessary since the successor trustee may not be granted the authority to manage property not in the trust.Learn more about Financial Planning