This is the fifth in a series of posts on whether it makes sense to create a revocable living trust or not. You can read previous posts here (health and age), here (family dynamics), here (privacy and estate size) and here (real estate). This is the first post on when it might not make sense to create a revocable living trust or at least postpone it. Many of these factors are the polar opposite of the reasons to create a trust.
Having assets in a living trust will mitigate an in-depth probate administration (regardless of how well an estate plan is draft most estates have small issues to resolve in probate like a newly purchased car), the upfront costs and time expenditures in establishing a living trust might weigh against creating a living trust.
One of the most important factors in determining whether to create a living trust is a person’s age. A majority of younger adults do not have the same worries about health – physical or mental – as that of an older person. But how young is young? Well, a person under 30, unless there is some known health issue, might be considered too young to establish a trust. Someone under 40, depending on individual medical issues, probably can also hold off on establishing a living trust. But it depends on the other factors.
Another important factor, deriving from a person’s age, is the time necessary to fund a trust. While an attorney drafts the legal documents, it is usually up to the client to fund the trust. The client does this by transferring ownership from the client’s name to the trust’s name.
Transferring assets takes time. It requires a person to re-title the person’s real property from the person’s name to a living trust. That means the person has to go to the bank to change the title on a bank account or go to land records to change the deed on the client’s home residence. Many younger people, with work, raising children and other outside activities, may lack the free time in their daily lives to follow through on funding a trust.
That may seem harsh, but, I see younger clients draft living trusts and then never following through with funding the trust, but rarely do see an older client not take the time to fund a trust.
Next post will go into more reasons a person might not want to create a living trust.