ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Financial Planning

Should You Attend a Seminar and Purchase a Living Trust?

Updated on March 4, 2013

What is a LIving Trust?

A living trust, basically speaking, is a document that a person creates during his or her lifetime that spells out the person's desires for his or her assets, dependents, and heirs.

In a living trust, first there is the grantor. This is the owner of the property (money, land, materials, etc.) who outlines his desires in the trust. Then, there is the trustee. This person, designated by the grantor, manages the trust according to the terms and conditions outlined within. Finally, there is the beneficiary, or beneficiaries. This is the person or people who receive the benefits outlined in the trust.

The basic difference between a will and living trust is that a will does not go into effect until the grantor (called a testator in a will) dies, but the stipulations in a living trust can go into affect immediately.

What About Those Seminars I've Been Invited To Attend?

There are several companies out there that sell "living trusts." As much as I can surmise, they all pretty much give the same reasons to convince someone to purchase one of these cookie-cutter revocable trusts prepared by, presumably, an attorney. While I would not go so far as to call these documents "scams," I do think their sales pitch is seriously lacking disclosure.

Some Things To Consider First

  1. Before you pay somewhere in the range of $2,500 to $5,000 for one of these blanket trust forms, price out some local attorneys. You likely will be able to negotiate either the same or a better price for personalized attention to your estate planning needs. A "living trust" may be a very bad idea, but if you really want one, a personalized trust prepared by someone in your jurisdiction is far superior to a form filled out by a high-pressure salesperson at a seminar.
  2. Do not buy anything else these companies may try to sell you. The company may be using the "living trust" to lure you into buying other toxic items.
  3. You do not need a trust to designate beneficiaries of property on your death. Designations for certain items of property have been done through wills for a very long time. Having a trust do it instead of a will, WILL NOT provide you any extra protection--despite claims to the contrary.
  4. A living trust will not necessarily protect your beneficiaries from taxes. Section 61 of the federal tax code says that "gross income" means all income from whatever source derived"; this includes "[i]ncome from an interest in an estate or trust." I.R.C. s. 61(a)(15) (2009). When you put property into a trust, it may pass to your intended beneficiaries as taxable income, even if you avoid estate taxes. If you want to avoid taxes and probate altogether, talk to an attorney to help you manage your assets before you die.
  5. You do not need a "living trust" to avoid the hassles of probate. In North Carolina, a will can be prepared such that your executor may have to appear in court in a limited fashion, but will otherwise not be subject to constant court supervision. Other states likely have a similar provision in their general statutes. Talk to an attorney.
  6. A "living trust" is absolutely not exempt from being challenged after death; anybody can sue anyone over anything . . . pretty much. The same rules of capacity, undue influence, fraud, etc. apply to trusts as in wills, and living trusts have been voided on challenges after death on these theories. Also, the same types of provisions discouraging beneficiaries from challenging a trust can also be put into a will, and those same provisions will be subject to state law as to their enforceability. A trust will give you NO extra advantage in staving off those blood thirsty, ruthless, money-mongering relatives that you wish to exclude from gaining your assets on death.

Are Your Assets In Order?

What have you done to prepare your loved ones in the case of your death?

See results


    0 of 8192 characters used
    Post Comment

    • bankscottage profile image

      bankscottage 5 years ago from Pennsylvania

      A lot of elderly get sucked into scams where they think they will be doing something good for their beneficiaries or something to increase the return on their investments. It is hard for them to give up control of their finances and even harder for someone to take them over.

    • clairewait profile image

      clairewait 5 years ago from North Carolina

      My parents currently have a similar philosophy... spend or give away everything to avoid exorbitant estate taxes. I probably should go back and re-emphasize point one in my drop down list. Essentially, this post was to point out that living trusts in themselves are not a bad thing, but certainly do not need to cost as much as those "seminars" are charging. Not only is a personal attorney just that, personal, but nearly always much cheaper. (Heck, I think Legal Zoom is cheaper and does about the same thing as the seminar offers.) My husband and I worry about the grandparents on his side of the family who could so easily be suckered in without a lot of background.

    • bankscottage profile image

      bankscottage 5 years ago from Pennsylvania

      Interesting Hub and you provide several valid reasons why a living trust may not be right for everyone, but it can be right for some people. I agree, you should not get a living trust at a seminar, but you should talk to a lawyer if you want one. Every state is different and some times the laws vary as to the relationship of the beneficiary to the benefactor.

      Like you, I am not a lawyer, but I do have a living trust (as does my wife). We created them with the assistance of a lawyer and it required quite a bit of discussion between all of us. It was not a fill in the blank cookie cutter form.

      When you designate who inherits your property through your will that property (real estate) will have to go through probate to finalize the transfer. It doesn't happen automatically. My wife and I have living trusts, in part, because we own property in more than one state (home in PA, camp in Maine). Those properties are in a trust. Upon our death, the properties will go automatically to our beneficiaries. They would not have to go through probate. This will save our executor a bit headache of having to go through probate in 2 states. There will still be taxes to pay, but far less legal hassle to get our property to the people we want it to go to.

      One other misunderstanding about living trusts, your assets do not get into them automatically. You actually have to "fund the trust". You have to change the name on every account, every piece of property, etc. from your name to the name of the trust. Making the trust is the easy part, funding it is the hard part. It can be expensive and time-consuming to transfer accounts and property. But, if you don't do it, you wasted your money on the trust. Also, most mortgage companies won't just let you change the deed from your name to that of a trust. You will have to payoff or refinance the loan to do it. Finally, going forward, you have to remember to put all new assets in the trust. As I said, creating the trust is easy, funding it can be hard and never ends.

      I think the best advise is spend your money or give it away before you die and then you won't have to worry about any of this.