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An Introduction to Living Trusts... Page 2
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4. How does a
living trust avoid probate?
Property you transfer into a living trust before your death doesn't go through probate.
The successor trustee--the person you appointed to handle the trust after your
death--simply transfers ownership to the beneficiaries you named in the trust. In many
cases, the whole process takes only a few weeks, and there are no lawyer or court fees to
pay. When the property has all been transferred to the beneficiaries, the living trust
ceases to exist.
5. Is it expensive to create a living trust?
The expense of a living trust comes up front. Lawyers have figured out that they can
charge high fees--much higher than for wills, documents usually of comparable
complexity--for living trusts. They commonly charge upwards of $1,000 to draw up a simple
trust. If you're going to hire a lawyer to draw up your living trust, you might pay as
much now as your heirs would have to pay for probate after your death--which means the
trust offers no net savings.
But you don't have to pay a lawyer to create a living trust. With a good self-help book or
software program, you can create a valid Declaration of Trust (the document that creates a
trust) yourself. If you run into questions that a self-help publication doesn't answer,
you may need to consult a lawyer, but you probably won't need to turn the whole job over
to an expensive expert.
For more information, see Do You Need a Lawyer
to Make Your Living Trust?
6. Isn't it
a hassle to own property in a trust?
Making a living trust work for you does require some crucial paperwork. For example, if
you want to leave your house through the trust, you must sign a new deed, showing that you
now own the house as trustee of your living trust. And in a few states, you may need to
use special language in your trust document to avoid wrinkles in your state's income tax
laws. This paperwork can be tedious, but the hassles are fewer these days because living
trusts have become quite common.
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