Dave Ramsey has helped a lot of people get their financial lives together. He’s really good at getting people to stop procrastinating, pay off debt, and start estate planning. We agree with him on a lot of things. However, we do disagree with him on one point about trusts.
Ramsey on Trusts: What We Disagree On
Ramsey has written that once you put your assets in a trust, you lose some control over those assets. He argues that you need a separate trustee to approve every transaction.
“An inconvenience of living trusts is giving up ownership and control of your assets,” he writes. “Even though you can make changes to revocable trusts, you still have to go through a process first.”
We disagree, because that’s not how living trusts work. In virtually every revocable living trust created today, you are the trustee. You transfer your assets from yourself as an individual to yourself as trustee. You still buy and sell, manage accounts, and do whatever you’d normally do—without asking anyone’s permission. The scenario Ramsey describes would only apply if you named someone else as trustee from day one, which isn’t standard practice.
Ramsey on Trusts: What We Agree On
Most people have no estate plan at all. Ramsey’s emphasis on action has moved a lot of people off the sideline. We agree wholeheartedly with him on that. (So do Suze Orman and Robert Kiyosaki.)
His point that unfunded trusts are worthless is also accurate. A trust that exists on paper but holds no assets does nothing. You have to actually transfer your property into it. So we agree with him there too.
And when he says living trusts are expensive if you get one from an attorney, we agree with that too. Working with an estate planning attorney is expensive (although not as expensive as probate). While that may not matter as much for wealthy individuals or families, it matters a lot for the rest of us.