A University of Alabama Law School Clinical Program funded in part by West Alabama Regional Commission

F. A word about Living Trusts

There are a lot of companies aggressively marketing Living Trusts to older persons. There can be good reasons for having a living trust, and many attorneys use them effectively, but the major reason offered by companies peddling them is “to avoid probate”. This can make sense in a state in which probate procedures are complex and intrusive.

In Alabama in the ordinary estate probate – if needed at all – is usually not expensive, complicated or intrusive. The process is usually completed in seven months or so. There are some benefits to probate, as well. For most Alabama estates it may make little sense to go to the expense of having a living trust drawn up and funded if the primary reason is “to avoid probate”. Before you fall for someone’s sales talk, consult an attorney familiar with wills, trusts and probate procedure.

Over-aggressive living trust marketing and outright scams have become so pervasive that the attorneys general of several states have established task forces to try to stop this financial abuse. The most frequent targets are vulnerable seniors. Trust salespersons overstate the costs and complications of probate and wills, use the all-too-common distrust of attorneys, and every other button they can push, to frighten seniors into buying something they don't need. Seniors and families should be alert to the possibility of abuse. Many of the living trust peddlers come right into the home and use high-pressure tactics at the kitchen table to bully and manipulate seniors into buying "today".

A well-planned trust can be more expensive than the combined costs of having a will prepared and probating it at the death of the testator. Decisions must be made about whether a trust is appropriate for you, and if so, what to put in trust. Then, property must actually be transferred, which generally requires further preparation of documents. Also, you will still need a will to cover things not placed in trust, or forgotten, or purchased after the trust is executed and funded. Too often people execute living trusts but do not fully fund them, so their goals cannot be accomplished.

A living trust can be very flexible and can offer advantages in passing property at death as well as management of business affairs if the grantor becomes incapacitated, but these documents are not for everyone. If you are considering a living trust, get the advice of an attorney experienced with them. Be wary of companies selling “one-size-fits-all” trusts whose primary benefit is to the company selling them. Too often they are simply tools to obtain information about what you have so the company can try to sell you insurance or investment products (with high commissions, of course). (See additional information on Living Trusts in the Powers of Attorney article on this web site.)

Living trusts do not shield property from estate taxes, and they can cause problems in qualifying for public assistance with nursing home expenses. Irrevocable trusts can be and frequently are used in estate planning, but these can be complicated. It is vital to get good advice, since once executed, they cannot be changed or revoked.

Go back