In estate planning, one of the most popular trusts in the living trust, also know as a revocable living trust or sometimes called a family trust.  Most people use living trusts to avoid probate when they die, while keeping full control of all assets and properties in the living trust while they are alive. 

    May people falsely believe that they do not need a living trust if they add their child as joint tenancy to the property that they own.  This is false because a joint tenancy has many drawbacks.  For example, if the child were ever in a lawsuit, then the property held in joint tenancy with a child would be subject to any judgment that the child is owed. 
Joint tenancy also has a step-up valuation problem.  For example, if the property was initially purchased for $100,000.00, and at the time of your death the property was worth $1 million, then the child would be liable for tax from the $100,000.00 to $1 million mark.  A living trust would have avoided this problem. 
Another problem with joint tenancy is that after you and your spouse have both passed away, then your child would have to pay tax for anything above the estate tax exemption.  Not so with a trust.
Another very real problem with joint tenancy is that if you have more than one child and not all of them are part of the joint tenants then the child listed on the title of the property does not have to share a the property according to your will.  This could cause a lot of family problems.  For these reasons, it would be much wiser create a living trust than to try to do the same task under joint tenancy. 

    Another benefit of living trusts is that you can leave properties for your child and specify how the properties are distributed to the child.  The three most common ways are: 1) you leave the property to an adult and trust that adult to use the property for the child, 2) specify a custodian under the law and have the custodian manage the property until the child turns the legal age in your estate, 3) created a child sub trust, and use the sub trust to hold the property for your child until your child is of a certain age, at which point the property is given to the child outright.  Each of the above options have their advantages and disadvantages.  Call Kenzl Law Offices for help deciding on what to do.

    Other benefits of a living trust is that should you and/or your spouse become incapacitated and cannot take care of your child, you can designate a guardian or conservator to take care of the child.  Also by placing a property in a trust you can maximize your federal estate tax exemptions, which could save you considerable amount of money.