Planning: Is a Living Trust Right for You?

2017 Finances September 2017 Tom Zachystal Yann Kostic

By Yann Kostic and Tom Zachystal from the September 2017 Edition

Some companies use fear mongering tactics to sell living trusts to people who simply do not need them. So how do you know if you are really a good candidate for a living trust?

The primary advantage of a living trust which is a legal entity that holds legal title to certain of your assets is that assets in the trust do not go through probate, the lengthy and often expensive court-supervised process of distributing your property to your heirs upon your death.

But you may not need the probate benefits, because there are a number of other ways to avoid probate, such as making gifts before death and adding a payable on death designation to an account. Plus, living trusts can be time consuming and costly to set up and involve ongoing maintenance.

So, what should you think about when considering if you need a living trust? Age, wealth and marital status are three things to consider.

Living trusts often do not make sense for middle-aged people in good health, because people at this stage in life do not need to worry about probate for many years. The less wealthy you are, the less sense a living trust makes, because if you do not have significant assets you will not save much by avoiding probate. Finally, if you are married, and you and your spouse plan to leave your property to one another, probate will not be necessary for those assets.

A living trust may be helpful if you have children or grandchildren with special needs, if you own your own business or if you own real estate in more than one state or country (regardless of your age). You also would want to consider a Living Trust (or even another type of Trust), if you were to leave some of your estate to charities or non-profit organizations. It is important to remember that a US trust might not necessarily be recognized in Mexico and so it might also be necessary to have a Mexican will for any Mexican assets.

In conclusion, do not trust any one size fits all estate planning product: If you want to know if a living trust is for you, it is best to consult a qualified Financial Advisor or a Certified Financial Planner, known as CFP.

The legal and tax information contained in this article is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive. Consult your legal or tax counsel for advice and information concerning your particular circumstances. Neither we, nor our representatives may give legal or tax advice.

Note: This material has been prepared for informational purposes only, and is not intended to provide financial advice for your particular situation.

Yann Kostic, MBA and Tom Zachystal, CFP, are Presidents of their respective Assets Management firms, both US-Registered Investment Advisors (RIA). Tom is the San Francisco Financial Planners’ Association President. Tom and Yann cater to US ex-pats in Mexico and worldwide. Comments, questions or to request his newsletter, “News you can use” contact him at, in the US at (321) 574-1521 or in Mexico, (376) 106-1613.

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