For those wishing to avoid probate, a living trust is often the most common avoidance tool. This is especially true for people that have major assets like a home, investment property, stocks, bonds, and other big ticket items.
Given the advantages of avoiding probate, it may seem like a living trust is something that everyone needs no matter their situation. However, while some lawyers make such a claim, a living trust may actually not be necessary for everyone.
There are two reasons for that; first, there are other probate-avoidance tools that may be more appropriate, especially for certain types of property; and second, some people don't really need to avoid probate.
For example, you may not need a living trust if:
You can more easily transfer your assets by another probate-avoidance device
Other easy ways to avoid probate include pay-on-death bank accounts, joint tenancy, life insurance, gifts, and in Utah, transfer-on-death deeds for real estate. There are also other devices that you can learn about or ask an estate planning attorney about. Each of these devices can be just as effective at avoiding probate as a living trust.
You are young and healthy
It is not very common when a healthy, younger person dies without warning. Because of this, a Will may be all that you need. While a Will does go through probate, probate only occurs after you die. Thus, as long as your living, probate-avoidance is of no benefit.
Likewise, when you are young it is likely that your primary estate planning goals are simply to ensure your property goes to the people you want and that you name someone to take care of your children (if you have any). If this is true, a will often achieves these goals more easily than a living trust.
Some attorneys may recommend a living trust to young people in case they become incapacitated and can no longer manage their estate. However, most young people don't own substantial assets or estates that need to be managed. More importantly, an easier way for young people to manage their assets should they become incapacitated is to sign a power of attorney.
Overall, if you are young and healthy, a living trust may be more appropriate later in life when the prospect of death is more imminent and you have accumulated more property.
You don't own much property
If you don't own a lot of property than there isn't any real benefit to avoiding probate since probate likely won't cost that much anyway. In fact, in Utah, if your total estate is less than $100,000 than you all of your assets can be transferred by way of a beneficiary affidavit rather than probate.
However, if you don't have much property but you do have a life insurance policy, and your young children are named as beneficiaries, than it may helpful to have a trust set up so that any life insurance proceeds are managed by the trustee instead of a court appointed conservator. This is especially recommended if you do not want your children receiving the insurance proceeds as soon as they turn 18.
You have complex debt problems
If you have a lot of creditors, then going through probate may actually be helpful. The reason for this is that probate provides an absolute cutoff time for creditors to file claims.
For instance, in Utah, creditors have one year to make a claim against your estate as soon as you file in probate court. That time period shortens to three months if you provide public notice of your probate proceeding. In contrast, a trust may be subject to creditors' claims much longer than a year.
So, a living trust?
To sum it all up, a living trust is a great tool to avoid probate and will likely be just what you need at some point in your life, if not already. However, a living trust is not always the answer to your estate planning issues and there other steps you can take to protect your assets and provide for those you care about. A good estate planning attorney can help you decide what is best for you.