No Asset Protection: A living revocable trust does not protect assets from creditors reach. It takes administrative work: it takes time and effort to re-title all your assets from individual property to a trust. All assets that are not formally transferred to the trust will have to go through probate. Creating a living trust is not difficult or expensive, but it requires some paperwork.
The first step is to create and print a trust document, which you must sign before a notary public. It's no more difficult than making a will. In most states, transfers of real estate to revocable living trusts are exempt from transfer taxes that are usually imposed on transfers of real estate. However, in some states, transferring real estate to your living trust could result in a tax.
See Real Estate in Transferring Titled Property to Trust. Switching assets to a revocable trust will not save income or estate taxes. While assets held in an irrevocable trust are generally out of reach for creditors, that is not true with a revocable trust. In general, the disadvantages of a trust are significantly offset by the numerous advantages that are created by having a living trust.
The biggest advantage of a living trust is that, unlike a last will and will, a trust allows you to avoid probate court. There are three main reasons why this is important. Here is California Probate Code 6402 that discusses how estate will pass to family members under the state's “intestate succession laws.” One of the first disadvantages is that a will is that it will still go through the probate process. After you die, which, if the time to distribute the assets to the beneficiaries and the cost is a factor, then you are considering 18 months up to liquidate the estate, not including having it done in public view.
Yes, it's usually less expensive to create a will than a trust, but in today's competitive landscape, the cost of creating a trust has dropped dramatically.
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