Business: Is a living trust right for you?

Is a living trust right for you?

Living trusts often are touted as must-have documents, but they're not for everybody. Consider these tips:

By Compiled by LAURA T. COFFEY

1. Educate yourself about wills, trusts and probate. A will provides instructions about how you want your property distributed after your death. A living trust allows you to do the same thing, and lets you appoint a trustee to manage your property during your lifetime if you become disabled. Trusts are a way of avoiding probate, the time-consuming legal process of transferring property to beneficiaries.

2. Understand joint ownership. Jointly-held property with right of survivorship does not need to be in a trust to avoid probate because it automatically goes to your co-owners.

3. Consider your Medicaid eligibility. You may become ineligible for Medicaid benefits if you establish a trust naming you or your spouse as beneficiary within five years of the time you need to apply for Medicaid. Assets in trust are considered available to cover your nursing home expenses.

4. Count the costs. Pay close attention to all the costs involved when comparing prices between wills and trusts. If you opt for a will, your estate eventually will have to pay to probate your will; if you choose a living trust, your estate must pay to fund the trust and maintain it before and after your death.

5. Transfer assets with care. A revocable living trust does not go into effect until you "fund the trust," which involves transferring property from your name to the trust. If the transfer is not done correctly, the trust won't be valid and the state will decide who inherits your property.

6. Don't cave in to pressure. Many living-trust promotions are inadequate or fraudulent. Don't be pressured into acting fast to take advantage of a "special price."

7. Shun false claims. Aggressive trust pushers often lead customers to think the AARP is selling or endorsing their products, but the AARP does not endorse or sell any living trusts.

8. You can cool off. According to the Cooling Off Rule, the salesperson must inform you in writing of your right to cancel the deal within three business days if you buy a living trust in your home or somewhere other than the seller's permanent place of business.

9. Consult a lawyer. Before you create a trust or sign away any property, talk with a lawyer who has experience with wills, trusts, the probate process and Medicaid rules.

10. Know where to turn. For information, call the AARP at (800) 424-3410 and ask for a copy of Product Report: Wills & Living Trusts. If you think you've been defrauded, file complaints with the Florida Department of Agriculture and Consumer Services at (800) HELP-FLA (435-7352) and the Better Business Bureau at (800) 955-5100.

Sources: AARP (http://www.aarp.org); Federal Trade Commission (http://www.ftc.gov); and National Academy of Elder Law Attorneys (http://www.naela.com).