Disadvantages of Funded Revocable Trusts

Estate planning clients often ask what are the disadvantages, if any, of using a funded revocable trust. The following are disadvantages of using trusts:

1) Trusts may be complicated to structure, explain and understand

2) Retitling of assets is necessary. To really take advantage of the avoidance of probate, the retitling of assets to trust must be done prior to death.

3) By the time the grantor dies, frequently he has accumulated assets in his individual name, so that by the time administration is required, there are assets in his name and the trust.

4) There is at best a"sketchy" statutory system for applying nonprobate assets to creditor claims. These laws are all over the board and in many instances are at the whim of Judges or Clerks. For example the law in North Carolina, like many states that assets that pass outside probate are to be used first to pay creditors.

5) Assets of the revocable trust are available at some level to pay decedent’s creditors. This is not really so much a disadvantage as it is a realization that revocable trusts are really not creditor protection trusts.

Joseph Henninger, JD
NC Board Certified Specialist in Estate Planning & Probate Law
Charlotte Estate Law
Wishart, Norris, Henninger, and Pittman, P.A.
Tel: (704) 364-0010
Fax: (704) 364-0569
josh.henninger@wnhplaw.com
http://www.wnhplaw.com

Danica Little, JD, CPA
NC Board Certified Specialist in Estate Planning & Probate Law
Charlotte Estate Law
Wishart, Norris, Henninger, and Pittman, P.A.
Tel: (704) 364-0010
Fax: (704) 364-0569
danica.little@wnhplaw.com
http://www.wnhplaw.com

 
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