This is an article from the Kulas Law Group (https://www.kulaslaw.com/) in Port St. Lucie, Florida, that we thought others may find helpful.
Like most people, you probably would rather avoid spending any time thinking about or planning for your own death. In fact, those thoughts are so discomforting that fewer than half of the adults in the United States have even bothered to create a simple will. The problem is, as it always has been, that death is inescapable. And when someone dies without a plan in place, that can create all sorts of complications for those he leaves behind.
The good news is that estate planning doesn’t have to be as complicated as some might believe. In fact, with the right guidance and assistance, the entire estate plan creation process can be extremely rewarding for you. You will not only enjoy the benefit of knowing that you’ve acted responsibly on behalf of your loved ones and future heirs, but can gain important peace of mind from knowing that your family will be cared for when you’re gone. Still, there are decisions to be made before you can create that plan, and one of the most important involves deciding whether you need a living trust.
The Living Trust: What is It?
Chances are that you read the words “living trust” and thought something along the lines of, “oh, those things. Aren’t they just for rich people?” If so, then just know that your assumption is one that is shared by untold numbers of people around the country. The fact is that trusts were once pretty much reserved for only the wealthiest individuals and families. In recent times, however, living trusts have become so flexible that they can benefit almost anyone – including you.
At its core, a living trust is a relationship between three parties: you, the Trustee who manages the assets in the trust, and the beneficiaries who will ultimately benefit from it. In that respect, it serves as a vehicle for the orderly distribution of your assets after you die – in much the same way that a will helps a court to settle your estate. The reason why so many people are now choosing to use trusts as a primary estate planning tool these days, however, has to do with all of the many advantages trusts offer when compared to traditional Last Wills and Testaments. Just consider these benefits:
- With a trust, you can secure your assets in a way that ensures that they are efficiently distributed when you die. Even if you name yourself as Trustee, you will still have a named Successor Trustee who will take over administration of the trust after you pass away.
- Because the trust distributes your assets, there is no need for assets held by the trust to go through the probate process. That can save the time and expense typically associated with probate, ensuring that the value of your estate is not diminished by probate court costs and lawyer fees.
- The trust’s Trustee provisions can empower that person to act in your capacity in the event that you become incapacitated due to injury or illness. Like a Financial Power of Attorney, the trust ensures that your asset management continues uninterrupted and without the need for a court-appointed Guardian or Conservator.
- Trust assets can still be invested while held by the trust, which means that your wealth can continue to grow even after your death. That’s important for Grantors who want to ensure that they can provide trust income to dependent children and spouses.
- Living wills enable you to retain control over your assets while you are alive, and possibly even reclaim ownership of them if need be. Those revocable trusts are many people’s first choice. There are also irrevocable trusts that can provide certain other benefits as well. If you’re in doubt as to which would benefit your unique needs, consult with a competent estate planning attorney.
- If your situation or goals change at any time prior to your death, you can alter the terms of your living trust to meet your new objectives.
- You also won’t need to consult a lawyer before buying new assets or selling the assets held by the trust. Though some express concerns that the creation of a living trust would somehow complicate their management of their own financial affairs, nothing could be further from the truth. The reality is that your trust will almost certainly have listed as the Trustee, and that leaves you with control over all of your assets until you die or lose the capacity to manage your affairs.
- Your living trust can make it easier to manage properties scattered in multiple states. Some people often wonder whether real estate in other states can be included in their trusts, and the answer is a resounding “yes!” In fact, you absolutely should include all of your assets in your trust, regardless of their location, to ensure that your estate avoids probate in those other jurisdictions.
- A living trust can also help you gain a new perspective on your actual wealth. Often times, it can be easy for people to underestimate their estate’s value because they never take time to take stock of their assets. The titling process used in the funding of your living trust forces you to more closely examine your asset holdings – and can thus inspire a closer examination of your financial and life goals as well.
Starting the Process
Perhaps the only real disadvantage to the use of living trusts is that they are not things that you should attempt to create on your own. The online DIY forms and other self-help guides out there are never a substitute for qualified, professional legal assistance.