To Trust or Not to Trust…Part VII: Simple Finances and Less Complex Family Dynamics Might Delay Need for a Revocable Living Trust.

This is the seventh 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), here (ownership of real estate),  here (age and time) and here (simple estate). This is the third part 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.

A person’s financial situation is also an important factor in determining if a trust is necessary. A person with minimal wealth likely does not want to pay, nor need to pay, the upfront costs. It costs more in beginning to establish a living trust because an attorney needs to draft more documents beyond just a will.

The more complex the trust established the more the plan will cost. Why should a person spend X dollars in 2011 for a person to create a trust when it might only cost X plus some percentage many years down the road for person’s estate to be administered. If a person has a simple estate, it makes more sense to create a simpler plan that is flexible and then later address creating a living trust, when necessary.

In part II, I noted that a more complex family relationship might require establishing a trust to limit family strife. The converse of that is also true. The less complex a family relationship, the less the need for a trust exists. So, if a potential decedent is a single individual and not necessarily worried about what happens to the decedent’s estate upon death, a trust might not be needed. Another example of a simple family dynamic is the first marriage for both people, verse, a second or third marriage that has a number of children from previous marriages and the current relationship. However, if there is inherent family animosity, for whatever reason, and it is expected that problems will arise no matter how simple the family arrangement, having court oversight from the onset maybe preferred.

Each of the factors in the last six posts, on an individual basis, might support delaying or not establishing a living trust, but taken together, those factors might point a person toward creating a trust. Each individual situation is different and a full legal analysis is necessary to determine whether to create a trust or not.

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About Chris Guest

I am a trust and estate planning attorney working in the Washington, DC metro area. I offer comprehensive estate planning, trust administration, probate services and general business counseling for accountants, attorneys, business owners, consultants, federal and local government employees, retirees, other business professionals and other individuals.
This entry was posted in Estate Planning, Factors for not Creating, Trusts, Wills. Bookmark the permalink.

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