Disadvantages of Estate Planning

Disadvantages of Estate Planning

Here are some disadvantages of estate planning.

Irrevocable Trusts

  • Once assets go in, they stay in.
  • Rigid.  Once you set it up, they are hard to change.
  • Loss of control. You name somebody else as trustee.
  • Five year rule.  If you need Medicaid within 5 years of transferring property or money to an irrevocable trust, you may face a penalty period or have to repay the money.

Wills

  • Require Probate. It takes more than a Will to avoid the hassles and turmoil of probate.
  • Easy to contest

Revocable Living Trusts

  • Cost.  Revocable living trusts do cost more, but the advantages outweigh the disadvantages.  Especially good at avoiding probate.
  • Complexity.  They are complex documents.  More complex that a Will.
  • Maintenance.  You have to do maintenance over the years to make sure your assets are in the trut and the trust is up to dat
  • You should employee the expertise of an estate planning attorney

Life Estate Deeds

  • If you ever want to sell the property, then whoever else is on the life estate will have to deed the property back.
  • If you need Medicaid withing 5 years, you may face a gifting penalty.
  • The “life tenant” has the responsibility for maintaining the property.

These are some of the disadvantages of estate planning.  An estate planning professional will be able to work through the advantages and disadvantages of your overall plan to decide the best course of action.

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