and misunderstanding about living trusts provide the perfect cover for scam
artists who have created an industry out of older people's fears that their
estates could be eaten up by expensive probates and taxes. Some unscrupulous
businesses are advertising seminars on living trusts or sending postcards
inviting consumers to call for in-home appointments to learn whether a living
trust is right for them. In these cases, it's not uncommon for the salesperson
to exaggerate the benefits or the appropriateness of the living trust.
To prevent deception, fraud and unfair practices, the Better Business Bureau, along with the Federal Trade Commission advises consumers to learn the terms that are used in this aspect of financial planning before beginning conversations about it. For example:
Probate is a legal process that usually involves filing a deceased person's will with the local probate court, taking an inventory and getting appraisals of the deceased's property, paying all legal debts, and eventually distributing the remaining assets and property. Probates can be costly and time-consuming. Many states have simplified probate for estates below a certain amount, but that amount varies among states.
A trust is a legal arrangement where one person gives control of his/her property to a trust, which is administered by a "trustee" for the "beneficiary's" benefit.
A living trust, created while you're alive, lets you control the distribution of your estate. You transfer ownership of your property and your assets into the trust. If a living trust is properly drafted and executed, it can avoid probate because the trust owns the assets, not the deceased.
A will is a legal document that dictates how to distribute your property after your death. If you don't have a will, you die intestate, and the law of your state determines what happens to your estate and your minor children. The probate court governs this process.
Before you sign any papers to create a will, a living trust, or any other kind of trust:
This information is general in nature and is not intended as a reliability report on any company, product, or service.