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Three Common Myths About Living Trusts

10 May 2016

Michelle Garrett

On April 21, 2016, Prince, a world-renowned musical legend, passed away at the age of 57. His death was a surprise, and after his passing, it was discovered that he died without leaving behind a living will to direct the disposition of his assets as he would have wished. Prince also did not have a living trust set up to control his assets and distribute them to his heirs. While the debate over Prince's estate and his musical legacy is already boiling over between his siblings, people are once again being made aware of the issues surrounding estate planning. There are also some myths about estate planning. Here are three of them:

Trusts Are a Tool for the Rich

This is one of the biggest myths surrounding living trusts. Trusts are not just a legal vehicle employed by those who are very wealthy. Nearly everyone can benefit by establishing a trust to handle their assets after their death. This is especially true if you have children and a spouse that you wish to provide for after you are gone. The trust ensures that your assets are used the way you wish, and your dependents are taken care of in the manner you wanted. 

Establishing a Trust Is Too Expensive

Establishing a trust can be slightly expensive at the beginning. There are attorney fees and other related fees. However, the cost to establish a trust is far less than the cost of probate after your death. In addition, your trust will protect your assets from taxes after your death, so your heirs will get more of what you leave behind. If a relative agrees to serve as the trustee, you can further cut costs. In addition, establishing a trust before your death will reduce the amount of emotional distress that your heirs will have to deal with once you are gone.

I Am Too Young to Worry About Establishing a Trust

This is another common estate planning myth. No one is ever too young to ensure that their estate will be disposed of as they wish in the event of their passing. Since no one knows how long they will live, it is important to handle estate planning issues now so your heirs don't have a struggle after you are gone. You can make changes to your trust as your financial and life circumstances change and evolve.

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