Saturday, November 6, 2010

Living Trust or Probate

by David McCarthy

The "living trust" has been pitched as a new alternative to probate. It is neither one. It has been around for hundreds of years. It is not an alternative to probate.

As a probate avoidance tool, the living trust is only as good as the settlor's ability to make sure that all his/her property gets into the trust.

The settlor is the person who sets up a trust.

As time goes by the settlor acquires other property, e.g., by purchase, by inheritance, or by transfer or exchange of trust property. However, the settlor neglects to put the newly-acquired property into the trust. Unless that property is otherwise disposed of during the lifetime of the settlor, it will become part of the settlor's probate estate. Having a living trust in addition to a will makes sense. Having one in lieu of a will does not.

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