by George F. Dickerman, Attorney at Law  

Everywhere we look there are “free” seminars on living trusts.  Many offer a free lunch or dinner.  And the information given out during these seminars is often presented in a manner intended to scare the heck out of you!

Do you really need a living trust?  How about a will?  Well, as lawyers tend to say: “It depends”.  There are two main reasons for having a revocable (living) trust:

1.   To avoid probate

2.   To avoid taxes (maybe).


Avoiding Probate

A properly drafted revocable trust should avoid the need for your heirs to “probate your estate”, because the trust continues to “live” even after you die and, if properly funded, the property owned by the trust can be distributed to your heirs without the need to obtain court approval.

"Funding" your trust basically means transferring title from yourself into the name of the trust.  Another way to look at it is that your trust must be “fed” in order to continue to “live” - properly funding your trust is an essential task.  If done right, your estate will avoid the time-consuming and costly probate process.


Avoiding Taxes

Each person can currently leave $650,000 (year 2000) to their heirs without incurring an estate tax.  A married couple can pass on double this amount; however, a competent trust plan is required in order to pay the least amount in taxes (or avoid them altogether).

Most Americans don’t have estates large enough to worry about estate taxes.  Therefore, “free lunch” seminars that stress the tax advantages of living trusts are probably just trying to sell you snake oil.

Wills are a different matter.  Unlike the revocable trust, a will practically guarantees that your estate will need to be “probated” upon your death.  This means that your private instructions regarding the distribution of your estate will now become public information.

Often, wills are prepared along with a revocable trust as part of one’s estate plan—this is known as a “pour-over” will.  Essentially, any property that was not previously funded into the trust will now pour-over into the trust and be distributed according to the written terms of the trust.

If you don’t have a will or revocable trust, you still have an “estate plan”.  The State of California will distribute your property via the laws of interstate succession.  Pursuant to a statutory scheme, your heirs will receive your property according to their family relationship to you. 



Bottom Line


For middle-America, a simple living trust and pour-over will are worth the investment for the following reasons:

1.     To avoid probate

2.     To distribute your estate to the persons you choose

3.     To provide authorization for others to carry out your written instructions should you become incapacitated

4.     To keep your estate matters private and confidential

5.     To simply “Get your house in order”.


George F. Dickerman is a private elder law attorney. For more information on other elder law issues, please call his office at (951) 788-2156 or click here to visit his website:  http://www.elder-law-advocate.com/

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