Living trusts are private, changeable, and efficient. Are they right for you?
This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.
A living trust is a legal document that directs the transfer of ownership of your assets to a trust, from which a trustee distributes them according to your instructions after your death.
Also known as a revocable trust, this is a powerful tool for estate planning because it offers some noteworthy advantages over a traditional last will and testament when it comes to ensuring that your estate is managed and then distributed per your wishes, especially if those wishes are changeable before your passing.
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Avoiding probate is a major benefit
Of particular note is the ability of a living trust to avoid probate, the legal procedure that takes place to transfer an individual’s assets in accordance with their will after they die. Wills can avoid probate, but most wills don’t.
Probating a will can require public court hearings and can be an expensive and drawn-out process that takes months or even years to finish, and puts documents in the public domain.
By avoiding probate, a living trust helps ensure the division of your estate remains private. That can be a major factor for those who value discretion in their financial matters.
You can provide precise guidelines for the distribution of your assets when you create a living trust. For instance, you can plan for the gradual distribution of your assets to beneficiaries who are younger in order to shield them from making the poor financial decisions young people tend to make.
You can also include provisions for managing your assets if you become incapacitated, ensuring that your estate is handled according to your wishes even if you are unable to manage it yourself.
They’re not just for the wealthy
Living trusts are not just for the wealthy, and they don’t have to be complex or particularly expensive to create, though they can often cost much more to set up than a basic will. There are many online resources and software programs that can help you create a basic living trust. These tools can guide you through the process, making it accessible for individuals who may not have extensive legal knowledge.
However, if you have a more complex estate or specific needs, and even if it’s not that complex, it’s advisable to consult with an estate planning attorney. A professional can provide personalized advice and ensure that your living trust is tailored to your unique circumstances and doing what you want it to do.
What works best for you and your family
Whether or not to establish a living trust comes down to your particular situation. Such an estate planning document is a useful tool to think about if you wish to avoid probate, preserve privacy, and have more influence over the distribution of your assets. And, you can change it along the way. That’s what revocable means.
To decide if a living trust is the best option for you and your family, consult with an estate planning specialist who can help you carefully weigh your estate planning alternatives.
Then, whichever path you take, you and your loved ones can have peace of mind knowing that your assets are handled and dispersed in accordance with your preferences.