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Every few years, living trust seminars are intensively marketed in the media throughout the country. Once you attend, you'll receive coffee and cookies to be swallowed along with a powerful sales pitch touting the money-saving advantages of living trusts. Used as an alternative to a will, a living trust is another method of transferring assets to loved ones when you die. Advocates maintain that living trusts avoid the so- called high costs of probate, cost less than wills, and some even imply that there are taxes to be saved. But most of these supposed advantages simply don't ring true.

For one, probate costs aren't nearly as high as proponents contend. In many states, less expensive and speedier probates are set up for smaller estates. Additionally, the cost of preparing a trust can actually be more expensive than a simple will. And even if you have a living trust, you will not avoid probate completely. Marketers don't disclose that most people still need a pour-over will for assets not included in the trust. And the will must be of course probated. Also you save no taxes by using a living trust. Everyone is liable for estate taxes and income taxes are not avoided by putting assets in trusts. Proponents claim that living trusts ensure privacy. But while probate proceedings are public records, the likelihood of someone making an effort to find out about your will is remote.

Consumers should be wary of entrepreneurially inclined lawyers and financial planners who try to sell living trusts to an American population that largely doesn't need them. Here's a simple tip, if someone proposes a living trust, ask him if he has one himself.
Excerpted from Nightly Business Report, 3/20/96.
Copyright 1996 Community TV Foundation of S. FL, Inc.

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