If you are planning your estate, you may be seeking the advice and guidance of your close friends or family members. Even though it is common to trust your loved ones regarding this, it is suggested to be extremely careful as estate laws are incredibly confusing. There are numerous myths and misinformative things prevalent in society regarding living trust. It is necessary to be aware and alert not to fall prey to these myths.
Living trusts contain several complications and legal formalities that are not easily understood by everyone, especially those who are not professionals. However, this should not discourage someone from creating a living trust. By hiring an efficient Cherry Hill NJ estate planning lawyer, it is possible to create a trust that fits all the requirements of the maker.
Here are some of the commonly believed myths regarding living trusts so that you can save yourself from believing wrong information!
Living trust help in the reduction of taxes
A living or revocable trust comes with numerous benefits, including the elimination of probate and the creation of conditions for many usages within the trust. However, they do not serve the purpose of estate or inheritance tax reduction. Various other kinds of trust can be made to reduce the amount of estate taxes.
It is best to avoid probate in every case.
Often probate is an expensive as well as time taking process, which sometimes ends up costing around 10 to 15% of the estate’s worth. However, in many instances, the probate charges are less than $1000. For small-scale properties, the procedure and expenses of probate procedure are even lesser.
Guardianships can only be avoided by using living trusts.
This is a myth. Even though living trusts are created to decide the financial aspects of incapacitated people, it is possible to do the same with the help of power of attorney. Power of attorney has been considered a more efficient choice to avoid guardianship and financial decisions. Living trusts are not enough to provide medical health and daily life decisions regarding the conditions of the incapacitated person.
A living trust is useful for getting rid of creditors.
If the trust grantor is not deceased, the property inside the revocable trust is still considered the asset owned by the grantor. And, the creditors can pursue this asset as living trusts are not legally binding to the prevention of creditors from accessing your assets. A revocable trust can be utilized to prevent creditors from accessing the money or assets.