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Q.What are the disadvantages of a Living Trust?
A.There are a few disadvantages to using a Living Trust to distribute your property upon your death. First, setting up a Living Trust not only entails the careful preparation of a lengthy legal document, but also the proper transfer of your assets into the Living Trust. If the property has a title or ownership document (such as a home, car, or even bank account), you must change each assets ownership document to reflect that the ownership is being transferred to the trust. If the property has no ownership document, then simply listing the chosen property on the Trust Schedule of Assets is sufficient. Sometimes refinancing a home in a Living Trust requires additional deeds and steps— to qualify for a loan or refinance, some lenders require you to hold the property in your name. However, after you get the loan then you can place the property back into your Living Trust. Additionally the transfer of certain assets into or out of a trust can trigger some limited transfer taxes. The vast majority of states, however, exempt transfers of real estate to ownership by a Living Trust.
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