Have you ever heard the advertising slogan "One size fits all"? Most likely, you have. It's often used for clothing items such as hats, socks, and gloves, for tools such as hammers and wrenches, and even for kitchen appliances such as microwave ovens and refrigerators.

That same slogan is also used for certain financial products. Recently, living trusts have been touted as a "one-size-fits-all" solution for every financial planning problem. But while living trusts are extremely useful for many people, they're not necessarily appropriate for everyone.

When you create a living trust, you're basically passing some of your assets to a trustee who manages the assets according to the instructions you set forth in your trust agreement. The living trust is usually revocable, which means that you can make changes to the operation of the trust during your lifetime, as your situation and your expectations change. This flexibility is probably what draws many people to living trusts in the first place.

For example, you can use a living trust for management of your investment portfolio if that task becomes too burdensome for you. Or you can set up a "standby" living trust to manage your affairs for you if you should become injured or incapacitated. You can even set up a living trust to provide long-term asset management for your beneficiaries after your death. The possibilities are endless.

But flexibility is not the only benefit. When you die, any property in your trust doesn't go through probate. The assets either continue in trust for, or are distributed directly to, your trust beneficiaries. Thus, with respect to the trust assets, your family can avoid the cost, delays, and publicity that often accompany the probate process. (A will is essential for those assets you do not place in the trust.)

Plus, your revocable living trust may be less vulnerable to a legal contest than a will might be. In short, you can see how the trust is operating during your lifetime ~~ and be assured that it will continue to operate after your death.

Sound appealing? For many individuals, a living trust can solve any number of financial- and estate-planning problems. But, as we said, living trusts aren't necessarily for everyone. For example, if you have modest assets to put in a trust, the cost and effort involved may not be worth it.

Then there's the matter of probate. Yes, a living trust may be quicker and more efficient than going through the probate process, but certain assets do not require probate. Jointly owned property, for instance, passes directly to the joint owner. Insurance proceeds and retirement plan benefits also avoid probate and go directly to the beneficiaries. Thus, if the vast majority of your assets consist of non-probate property, and you are considering a living trust solely as a way to avoid probate, you may not need a trust at all.

And, generally, there are no tax benefits to setting up a revocable living trust. So, if you're looking only for tax savings, a revocable trust won't help.

However, if you are looking for a financial vehicle that can provide asset management for you today - and for your family after you're gone - a living trust may be just what you need.

Does a revocable living trust have a place in your financial plan? There's a good chance that it does. But, be sure to consult with a professional before acting. If we can be of assistance, let us know.