Most people do not need a Living Trust and it may not save any money. In some circumstances a Living Trust is necessary. For example, if you are married and your estate exceeds one million, there could be substantial tax savings by creating a Living Trust since it is possible the Federal Estate Tax could apply to estates beginning at one million on January 1, 2013, unless Congress passes a law to the contrary. In this situation a Living Trust can double the estate tax exclusion for married couples, which could mean major tax savings.
Other reasons to have a Living Trust could be where one has remarried and now has a blended family. Spouses may wish that their respective assets are passed on only to their children.
Some people think placing your assets in a Living Trust can insulate them from a creditor. This is incorrect since most people only draft what’s known as a “Revocable” Living Trust. With a “Revocable” Living Trust, assets can be transferred to and from the Trust during one’s life and is therefore subject to a potential claim by a creditor. However, placing an asset into an “Irrevocable” Living Trust may protect an asset from a creditor, however the asset may not be accessible to the one who created the Trust.
Most people do not have an estate in excess of one million and may not need a Living Trust. However, with a Living Trust keep in mind that the distribution of an asset can be postponed beyond the age of 21, especially where young heirs are involved.