There are a lot of legal vehicles you can rely upon when creating your estate plan. So many, in fact, that the process can quickly become overwhelming. But you don’t have to let confusion take hold in a time when you need direction and clarity. That’s why it’s important to learn about your estate planning options. Only then can you make the informed decisions that are right for you, your estate and your loved ones. In this post, then, we want to shed some light on the living trust. This estate planning tool can be highly effective, carrying many benefits that might be right for you.
What is a living trust?
A living trust is an estate planning vehicle that’s created while you’re still alive. In short, you transfer assets to the trust during your lifetime in either a revocable or irrevocable fashion. Why would you want to do that? There are several benefits to utilizing a living trust. They include:
- Saving time and money by avoiding probate: Unlike a basic will, a living trust doesn’t have to go through the probate process. This can save your estate a lot of time and money, ensuring that your identified beneficiaries receive their inheritances quickly.
- Maintaining privacy: Once wills hit the probate court process, they become part of the public record. Living trusts, on the other hand, can remain private. So, if you don’t want knowledge of your financial positioning and your asset distribution scheme out in the general population, then you’ll want to consider using a living trust.
- Using a successor trustee: Through a living trust, you can name another individual or entity to step in to manage the trust if the original trustee becomes incapacitated or passes away. This ensures that your assets will be managed with consistency and that there won’t be a disruption in the distribution of those assets.
- Providing flexibility: As mentioned above, a living trust can be revocable. This gives you the ability to modify it as circumstances and relationships change. In other words, you retain control to direct asset distribution in a way that you see fit.
- Allowing you to retain control: With a living trust, you can specify how assets will be distributed and when. This gives you significant control over the asset distribution process, which may provide you with peace of mind.
- Allowing for greater protection: Living trusts can be difficult to challenge. To successfully invalidate one, a challenger must typically prove that the trust’s creator lacked mental competency or was subjected to undue influence when the trust was created, when assets were transferred to the trust and when those assets were released to named beneficiaries. This can be a difficult burden to clear.
- Providing tax benefits: Assets that are placed into a living trust may avoid estate taxes. Depending on the size of your estate, this could save your estate and your loved ones a significant amount of money.
Be informed as you work to create your estate plan
There’s a lot of thought that has to go into creating an estate plan. That can be stressful to think about, and estate planning may not be at the top of your list of priorities. However, since you’ve found yourself to this blog, you’re taking the first steps in gaining the knowledge needed to create an effective and successful estate plan. If you’d like to learn more, then we encourage you to continue reading our posts and to speak with a professional about which estate planning options are best for you.