• Skip to main content
  • Skip to primary sidebar

Ask Liz Weston

Get smart with your money

  • About
  • Liz’s Books
  • Speaking
  • Disclosure
  • Contact

living trust

Q&A: “Simple” ways to avoid probate often create complications

August 5, 2025 By Liz Weston Leave a Comment

Dear Liz: I was perplexed by your column in which you pooh-poohed pay-on-death and transfer-on-death accounts in favor of trusts. But you gave no specific explanation. Rather, you said trusts “generally allow a smoother, more organized settlement of the estate than other probate-avoidance options.” Would you please explain what is smoother and more organized than POD and TOD transfers? (Beneficiary deeds fall into the same category as POD and TOD, to my way of thinking.) These transfers simply involve a copy of the death certificate and some minimal paperwork. What could be simpler?

Answer: The fact that you asked this question suggests you may not be familiar with the many ways these transfers can cause unintended problems. An estate planning attorney could fill you in.

One issue covered previously in this column is the fact that the person settling the estate typically needs money to pay final bills. If all the funds in the estate have been transferred to beneficiaries, the executor would have to beg for money to be returned (with no guarantee beneficiaries will cooperate) or pay the expenses out of their own pocket.

Another obvious issue is unequal distribution if you have more than one heir. Account values can change over time, leading to sometimes dramatic differences in what the beneficiaries receive.

Speaking of change, it’s the one constant in life. A living trust allows you to easily update your estate plan in one centralized place as circumstances change. Altering beneficiary designations can take a lot more work, and it’s easy to miss an account if you have several.

Beneficiary designations offer limited contingency planning. If the beneficiaries die before you or otherwise can’t inherit, the account could come back into your estate and be subject to probate. Also, many people forget to update their beneficiaries after major life changes, which can mean the wrong people inherit. More than one ex-spouse has received retirement funds or life insurance proceeds because the beneficiary form wasn’t updated.

Another unfortunately common occurrence is an inheritance that disqualifies a disabled beneficiary from receiving government benefits. You also can’t control how money is spent with a beneficiary designation, which can be a problem if the beneficiary is a minor, an addict or a spendthrift.

Plus, people get sued. Beneficiary designations offer no protection against creditors, while a properly written trust can help protect your assets and your heirs’ inheritance.

This is by no means an exhaustive list of the potential issues with beneficiary designations. They can be a solution for people with limited funds who can’t afford to pay an estate planning attorney, or when they’re part of a coordinated estate plan. Many people set up a trust for real estate and financial accounts, for example, and use beneficiaries for retirement accounts, notes Jennifer Sawday, an estate planning attorney in Long Beach.

The more money you have and the more complex your situation, the more you — and your heirs — would benefit from expert, individualized advice.

Filed Under: Estate planning, Q&A Tagged With: living trust, pay on death, pay on death account, payable on death, payable on death accounts, POD, TOD, transfer on death, transfer on death accounts, transfer on death deeds

Q&A: Why living trusts are a good option, most of the time

July 7, 2025 By Liz Weston

Dear Liz: My goal is to avoid probate and allow simplified access for my heir, who is also my executor. I have no family. I have chosen payable-on-death and transfer-on-death accounts instead of putting all financial assets in my trust, against the wishes of the attorney who drew up the trust for my condo. I am 79, with about a million in financial assets, with no debt or mortgage, and I am self-insured for long-term healthcare. Is the decision to use these accounts appropriate for me?

Answer: Please take the advice you paid for. The trust you have is probably a living trust, a flexible estate-planning device that avoids probate. Living trusts generally allow a smoother, more organized settlement of the estate than other probate-avoidance options.

The person who settles your estate is called your successor trustee and will perform much the same duties as an executor. But typically your successor trustee also can handle financial and other matters should you become incapacitated.

As covered in previous columns, payable-on-death and transfer-on-death accounts can be appropriate solutions for people with few assets who can’t afford to pay for a living trust. For more complex estates like yours, however, a living trust is the more appropriate option.

Filed Under: Estate planning, Q&A Tagged With: Estate Planning, living trust, payable on death, payable on death accounts, Probate, probate avoidance, revocable living trust, transfer on death, transfer on death deeds

Q&A: Bowing out of trustee duty

March 17, 2025 By Liz Weston

Dear Liz: My husband agreed to serve as successor trustee for his brother’s living trust several years ago. My brother-in-law also added me as a backup. My brother-in-law’s financial situation has gotten very complicated and we would like to be removed as trustees. How do we go about this removal? My husband has asked his brother to see the lawyer who drafted the trust so they can both discuss the change, but his brother has ignored this request for several months.

Answer: A successor trustee’s role is similar to that of an executor. Both are charged with settling someone’s estate. Being asked to serve is an honor, since the person choosing you is saying they expect you will act with honor, integrity and prudence. But you can’t be forced to serve, even if you initially said yes.

Your brother-in-law may have already named other alternatives. If not, a court can appoint someone. This would undermine one of the benefits of a living trust, which is to avoid a court’s involvement in settling an estate. But that’s ultimately your brother-in-law’s problem to solve, not yours.

Before you bail, though, understand that as successor trustee or executor, you don’t have to be a legal or tax expert. You can use the estate’s resources to hire people to help you — and in all but the simplest estates, you probably should.

Of course, financial complications can lead to other complications — family fights, disgruntled heirs and so on. You may no longer have the energy or willingness to face such difficulties. If that’s the case, you’ve given your brother-in-law the heads-up he needs to make other arrangements.

Filed Under: Estate planning, Q&A, Social Security Tagged With: Estate Planning, executor, living trust, revocable living trust, successor trustee

Q&A: Does insurance cover a home in a living trust?

February 10, 2025 By Liz Weston

Dear Liz: All of our insurance policies list my name and that of my husband. After the recent devastating Los Angeles fires, I heard from friends that we should add the name of our living trust to our home insurance policy because our house is in the trust. Otherwise, they say, some insurance companies may not cover loss or damages to it due to the discrepancy in the names, even if the trust has both of our names as trustees. Would you please confirm this?

Answer: Yes. If your home is in a trust, your insurance policies should list your trust as an “additional insured.” Insurance companies vary in their contract language, but you don’t want to find out after the fact that you aren’t covered.

Filed Under: Insurance, Q&A Tagged With: homeowners insurance, Insurance, living trust, revocable living trust

Q&A: Long overdue to dust off that living trust

November 4, 2024 By Liz Weston

Dear Liz: It’s been over 25 years since we paid for a living trust from a lawyer. We have since misplaced the original document. Our house is all paid up and we have one child. In case of our death, can he request a copy of the living trust from the county register?

Answer: Some states do allow living trusts to be registered with local courts, but typically these documents are private and never filed with a government agency.

You’re long overdue for an updated document, in any case. Estate plans should be reviewed every three to five years, after major life changes and whenever estate tax laws change — as they did in 2001, 2010 and 2017.

Filed Under: Estate planning, Q&A, Taxes Tagged With: Estate Planning, living trust, revocable living trust

Q&A: After creating a living trust, don’t forget to review it

October 28, 2024 By Liz Weston

Dear Liz: My husband and I created a living trust about six years ago. How often do we need to review it with an attorney if we’ve had no major life changes?

Answer: You’re already overdue.

The standard advice is to have your attorney review your trust every three to five years or after major life events, including marriage, divorce, a birth, a death, a change in your financial status or a move across state lines. You also should review and update your schedule of assets to reflect accounts you’ve opened and closed in the intervening years.

Filed Under: Estate planning, Q&A Tagged With: living trust, revocable living trust, trust

  • Page 1
  • Page 2
  • Page 3
  • Go to Next Page »

Primary Sidebar

Search

Copyright © 2025 · Ask Liz Weston 2.0 On Genesis Framework · WordPress · Log in