Deciding between a living trust and a will is crucial to estate planning. Before selecting the best instrument to meet your demands, seeking advice from a reputable trusts and estates attorney is vital.
A trust is an arrangement between a beneficiary and a trustee. Typically, the trust maker (also known as the grantor) transfers ownership rights and title of assets to the trustee for management purposes.
Control over Your Assets
Understanding living trust vs will empower you to direct the distribution of your property. The difference is that a living trust enables you to distribute your assets to beneficiaries without waiting until your passing. Instead, the belief can be triggered during your lifetime by simply assigning or transferring assets into the name of the trust. This allows the successor trustee to handle the distributions to your beneficiaries promptly.
If you cannot manage your assets, the successor trustee can take over to avoid your family going to court to obtain conservatorship. Additionally, a living trust can provide privacy for your family after you pass away since the information in it won’t become publicly available. This can prevent people from searching public records to determine your estate and how you distributed it among your beneficiaries.
It’s worth mentioning that a living trust cannot replace a will. Both should be utilized together to create a comprehensive estate plan. To ensure your will and living trust are aligned and meet all your requirements and goals, it’s best to seek guidance from a knowledgeable attorney. A complete estate plan can benefit your family, as it can minimize taxes, reduce administrative expenses and protect your privacy.
Avoiding Probate Court
All documents and assets are public records when an estate goes through probate. This is an issue for those that value privacy. You can keep the details of your assets private by placing them in a revocable living trust, which also helps you avoid probate. Moreover, a living trust lets you control how your assets are distributed. If you don’t put your assets in a revocable trust, the courts will oversee the dispensation of your assets and could distribute them to heirs that you may not have chosen. This can lead to family disputes.
A revocable living trust can save you money in the long run by avoiding probate fees. However, transferring property to the trust can be expensive and time-consuming as it requires making numerous title transfers and paying taxes and registration fees.
Additionally, any asset you don’t place in your revocable living trust must go through probate upon death. Your executor will need to try and locate relatives who may have a claim to the assets you own and work with them to settle your estate. If you cannot find your relatives, the court will assign a Guardian Ad Litem to act on their behalf and make decisions about the distribution of your assets.
Preserving Your Privacy
If you prioritize privacy, a living trust may be better than a will. Unlike a will, a living trust is kept confidential and does not require submission to the probate court. Additionally, a revocable living trust allows for amendments or revocation at any time while enabling you to name beneficiaries and trustees and provide instructions for taxes and debts. Furthermore, a living trust can be advantageous during your lifetime, ensuring that your wishes are communicated to your loved ones in the event of incapacity or death. Additionally, a living trust can avoid probate court by transferring most of your property into the trust before you pass away. This includes property with a title document, like a house or car. However, it can also have revocable trust accounts and other non-titled assets. Generally, items requiring a title document must be retitled into the living trust’s name for them to transfer upon your death.
Creating a Trust
Like a will, a living trust allows you to dictate what happens to your assets after death. However, unlike a choice, you can include instructions in a living trust regarding how taxes and debts are paid (though you cannot change the beneficiary of an IRA or other employer-sponsored retirement account).
One of the benefits of a living trust is that it can allow you to transfer assets between beneficiaries while still alive, such as a property deed or bank account. These can be distributed immediately upon your death or at a specific time later in life. This flexibility can be helpful in a situation where you have minor children who will need a large inheritance immediately.
If you become mentally incapacitated, a living trust can safeguard your assets. You can appoint a successor trustee to manage them, avoiding the probate court process and any potential family disputes. It’s important to weigh your goals and circumstances before deciding between a living trust and a will. An experienced estate planning attorney can help you create a comprehensive plan tailored to your needs.