What Is Wrong With a Living Trust?
A living trust is legal document that transfers all legal ownership of property and assets to a beneficiary. While a living trust protects your assets while you are alive, several drawbacks make setting up and operating a living trust difficult and confusing.
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Initial Costs and Fees
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While the total cost varies depending on size and value of your estate as well as your state's legal requirements, you can expect to pay lawyer fees, court costs, appraisal fees and other possible documentation costs.
Time Frame
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If the estate is particularly large, you have to spend a considerable amount of time gathering important tax records, savings and checking statements, as well as bonds, stocks and transferring titles of each asset. For each transfer, you can expect significant paperwork and waiting periods.
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Settlement Time
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There may also be a long period before the trust is settled after the creator dies depending on the amount of debtors making claims on property. Settlement dates can take several months to complete.
Refinancing Properties
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Several lenders refuse to loan money on properties placed in trusts. For this reason, you may have to transfer a property out of the trust, again transferring titles, and replacing the property back into the trust, which can lead to further expenses as well as being time consuming.
Court-Absent Difficulties
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Since living trusts do not involve the courts, beneficiaries may become victim to fraudulent trustees who may sell or transfer your properties without your knowledge. There are also several scams involved that offer pricey trust packages that fail to meet court requirements.
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