Top Three Advantages of a Living Trust

We cannot avoid death, but we CAN plan for it.  That said, only 60% of Americans have made a will or living trust to help those they leave behind.

When it is time to complete your estate planning, give strong consideration to creating a living trust.  A living trust provides for distribution of your assets according to your instructions.

But what other reasons are there for choosing a living trust for asset distribution?

That is the subject of today’s article as we reveal the three biggest advantages of a living trust.

A Living Trust Avoids Probate

The most significant advantage of a living trust is that it enables your estate to “bypass” probate

Probate is the court-supervised process that allows for the dispersal of your assets according to your instructions by your executor.  All wills must go through probate, a process which can take several months or even years.

A living trust, on the other hand, is not subject to probate.  As such, your family only has to wait for a few weeks to receive any death benefits, saving them considerable time.

Your successor trustee must pay your debts and distribute your assets as you wish.

A Living Trust Maintains Your Privacy

A will is a public document.  That means the information contained in your will is a matter of public record.  Anyone can search public records to find out about the distribution of your assets.

A living trust, on the other hand, is a private document and the information therein remains private.  A living trust is strictly between you and any parties involved, and your estate is distributed in private.

A Living Trust May Save Money

While creating a living trust may cost more than drafting a will initially, upon your death it may save your survivors considerable money.

When you set your living trust, the first thing you must do is fund the trust.  In other words, you need to transfer all your financial accounts and certificates to the trust through legal documents.

Other items must be considered as you establish a succession plan for your estate.  You’ll need to change the beneficiaries on any life insurance policies to your trust.  You will also need to make arrangements for your IRA or 401k plan.  

Finally, you must create a pour-over will which provides instructions for assets which are acquired between the time your living trust is created and your death.  A pour-over will also covers assets you may have overlooked or excluded from your living trust.

As you can see, there is some initial time and money that must be invested in the creation of your living trust. 

However, your survivors will be grateful for your efforts because it will likely save them time and money.  Your assets will not be subject to probate and they will be able to settle matters in considerably less time. Probate costs are taken from the will, something your heirs can avoid with a living trust.

Advantages of a Living Trust: The Bottom Line

Remember, planning for the distribution of your estate is a gift to your loved ones.  It relieves some of the pressure during a difficult time by providing clear instructions for the distribution of your assets.

Young couples with no children or those with a small estate may benefit from a simple will.  However, if you have assets and wish to pass them on to your heirs, you may wish to enjoy the advantages of a living trust.

If you found this article helpful, please check out more of our estate planning content. Or contact us, below!

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4 Must-Have Estate Planning Documents for Every Young Adult

4 Must-Have Estate Planning Documents for Every Young Adult

 

You are young and you are ready to change the world!  But as you charge into the world, there’s something you maybe were never taught…

The importance of taking steps to secure your current and future assets and estate through an appropriate estate plan.   


 

Last Will and Testament

A fully fleshed out estate plan consists of guardianship plans, and beneficiary documentation, and tons of other things.  But the first thing people usually think about is drafting a last Will and Testament.

In brief, a Will describes your wishes in regards to assets and estate after you pass. This includes decisions such as who gets to inherit what (in regards to your estate), who will manage your wealth if it’s necessary,   and even who should be named as the guardian of your children (if required).  There are a number of other documents and ways to do this, but as we said before, the last Will and Testament is often the first thing people think about and set up during their exploration of estate planning.

One of the biggest drawbacks to simply relying on a Will is that to enforce the details in the Will requires a court process known as probate.  Wherein a judge will determine how to interpret the desires of the will, in regards to metering out your estate.  Plus, probate is costly and time-consuming.  However, going through probate to disburse your estate according to your wishes is infinitely better than having a judge make an educated guess (their own opinion) on how to distribute your estate and assets.  Which is what they’ll do, without an up to date Will.

Hopefully, you have a long time to think about how your will needs to be worded and updated.  However, choosing not to establish one in the first place, is risky, and could ultimately be very costly for your family and heirs.  You can get ahead on this, by talking to an estate planning attorney today.

 

Living Will

Health and wealth are two very important aspects of estate planning.  And in planning for your future and potential catastrophic personal events, safeguarding them should never be overlooked.

A living will defines your intent and desires for potential end-of-life care.  Do you want to be on life support?  If so, how long?  How much of your estate and assets should go to support your end of life care?

You might utilize your living will to state advanced directives too.  For instance, you might state that in certain cases, pain killers should be used, but CPR or other extreme measures should not be attempted to sustain your life.

Living wills often work in conjunction with Healthcare Power of Attorney (Medical Power of Attorney), or Durable Power of Attorney.  You should familiarize yourself with these documents if you’re going to set up a Living Will.  Still, if you’re getting the bases covered, you should work with an Estate Planning attorney to set up your Living Will.

 

Financial Power of Attorney

A financial power of attorney designates someone to take charge of your financial assets and affairs in your absence or in case you’re incapacitated.  This may be part of a larger set of Powers of Attorney or may be specifically designated to only cover financial issues of your choosing.  The responsibilities of your financial POA might include taking care of and protecting your assets, distributing your assets,  or even something as straight forward as dealing with your bills.

In addition to working with a great Estate Planning attorney to set up your Financial Power of Attorney, you may also want to engage the services of a financial planner.  Working with a financial planner that understands estate planning will enable you to have a better understanding of the types of financial issues you FPOA designee would have to deal with.

Lilac City Law recommends a financial planner from our preferred partners list

 

Living Trust

Trusts play a pivotal role in planning for the future of your estate and how it will be taken care of when you pass or become unable to manage it. One of the greatest advantages of a living trust is avoiding probate which is the court process and associated fees that we described in the section above (Last Will & Testament).  One huge bonus of a living trust is that unlike a Will, it is a whole lot easier for you to update it throughout your lifetime. So, easier to update, protects your wealth from disappearing into taxes and probate, and you can set it up relatively easily with the help of a great Estate Planning Attorney.  It’s a win-win-win, for someone new to estate planning.  Here’s more information on living trusts.

 


Schedule an estate plan consultation today!


 

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