Living Trust

Disadvantages Of A Living Trust

There are a few disadvantages of a living trust that you should be aware of. Learn more about them here.

While there aren’t many disadvantages to a living trust, there are a few that you may want to be aware of.

Disadvantages of a living trust:

• The initial cost—while a living trust may actually end up costing less than a will (after court costs and attorney fees during probate, a will is a lot more expensive than it seems), the money has to be paid when you set up the living trust, as opposed to after your death. This means that one of the major disadvantages of a living trust is that your actual upfront cost can be quite a bit more than if you were to prepare a simple will.

• Time—another of the few disadvantages of a living trust is that it does take quite a bit more time and effort to prepare than a will. There is much more information to be included, so it simply takes longer.

• Refinancing may become difficult—while it is not impossible to refinance property that is in a living trust, it is a little more of a hassle than it would be if it were in a will. Property may need to be taken out of the trust name if you desire to refinance. Then, once the refinancing is finalized, the property can be placed back into the trust. So this is not a big disadvantage of a living trust, it is just a minor complication that can slow things down a little.

• No creditor protection—this is a big disadvantage of a living trust, but a will would not be able to offer this benefit, either.

While there are many benefits to be had through a living trust, there are also the few disadvantages mentioned above. While most are minor, and would not deter anyone from creating one, it is best to be completely informed of the disadvantages of a living trust so that you can make the best decision for you.