A living trust has become one of the most popular elements of estate planning, as there are numerous potential benefits. Those who are new to establishing an estate plan, may not be sure what a living trust is and whether it can benefit them. Perhaps the best way to find out whether a living trust is suitable for you, is to meet with an estate planning professional for advice. Then, you can get guidance as you go through the steps towards creating an official living trust.
A Living Trust Defined
A living trust may also be referred to as “inter-vivos” or “revocable trust”, which holds assets of the creator for his or her benefit throughout their lifetime. After passing away, these assets are distributed to loved ones chosen by the creator. The “successor trustee” is someone the creator had appointed to carry on the wishes as instructed in the trust after passing away, and is responsible for transferring assets to beneficiaries. The terms within a living trust can be altered at any time, as life events occur or if a significant change in financial status happens.
Here, we have described the top four reasons why people prioritize this document:
#1 Probate is Avoided
The process of probate is court-supervised, in which the deceased person’s estate is distributed. Probate can be lengthy, and in some cases may not complete until a year after the person’s death. Probate can also be expensive for loved ones left behind, as they may have to pay for court, attorney, and other legal fees. By creating a trust, an estate can avoid probate because a successor trustee takes responsibility for distributing the assets instead, without court supervision.
#2 Save Money in the Long Run
LIving trusts tend to be more expensive, at least initially. Creating a last will and testament is probably cheaper, but only in the short-term. Living trusts are more likely to remain strong in the event a person comes forward to file a contest, than compared to if the same thing happened to a will. So, by creating a living trust it can save money in the long run and help get assets into the hands of beneficiaries faster.
#3 Privacy is Protected
There may be nothing more excruciating for grieving family members than having to deal with complications of their loved one’s estate, all the while being under public scrutiny. If a person’s estate goes through probate, privacy is no longer an option. A will is also public record, so there’s no guarantee it’ll be handled discreetly that way either. The only way to keep a person’s legacy private, is to establish a legitimate living trust with help from an estate planning professional.
#4 Provides Peace of Mind
When created thoughtfully and with professional guidance, a living trust sets up a clear plan for how assets are to be handled after the creator passes away. The creator can maintain a peace of mind knowing that what they have built in their lifetime will be distributed with care and through private means.