A living trust is a commonly pursued legal document that can hold your most valuable assets while you are alive and set up a plan to distribute them to your beneficiaries after you die. For many people, this has served as a valuable lifeline to ensure that cherished family members and friends are cared for in the event of their death. While it’s difficult to imagine our friends and relatives going on without our presence, the peace of mind resulting from securing an estate planning measure like a living trust is invaluable to know your final wishes will be carried out.
There are many different types of trusts, but living trusts are the most common. They can be revocable or irrevocable, which means they can be changed or not changed after they’ve been created. The following are some of the main purposes that drive people to set up living trusts.
Avoid Probate
One of the primary reasons people establish living trusts is to avoid probate. Probate is the legal process of validating an estate arrangement and distributing the assets of an estate. It can be a lengthy and costly process, often taking several months or even years to complete. Some of the core reasons why these processes take so long are because all assets must be gathered and appraised, creditors must be notified, and finally, the assets can be distributed to the beneficiaries. Probate can be valuable when sorting out an estate, but the time and expense it takes are often seen as a hindrance. This can be avoided entirely by having a living trust in place, as the assets can be directly transferred to the beneficiaries.
Protect Your Privacy
Another reason people establish living trusts is for privacy purposes. When a will advances through probate, it becomes a public record. This means anyone can request to see the will and find out how the estate was distributed. This can be problematic for people who want to keep their affairs private. On the other hand, a living trust does not have to go through probate and can remain out of the public eye. This allows people to keep their final wishes private, avoid any potential drama, and not feel subjected to any peer pressure that would cause them to craft details in a trust that they do not genuinely desire.
Provide for Minor Children or Special Needs Beneficiaries
A living trust is also used to provide for minor children or special needs beneficiaries. This can be done by appointing a trustee to manage the assets on their behalf until the beneficiary reaches a certain age or is able to manage the assets on their own. This type of arrangement can be very advantageous. It ensures that the beneficiary has access to the resources they need while also providing some level of protection from creditors or others who may try to take advantage. Minor children and those born with special needs are some of the most vulnerable members of society. A living trust can provide a much-needed layer of security that they will value in the event of your passing.
Reduce Estate Taxes
For those with larger estates, a living trust can also help to reduce estate taxes. When an estate is left to a beneficiary, the IRS will levy taxes on the value of the estate. However, if the estate is placed in a trust, the taxes can be greatly reduced. This is because the IRS views a trust as a separate entity from an estate, which means the estate will only be taxed on the value of the assets that are actually distributed to the beneficiaries. This can be a significant advantage for those with larger estates who want to minimize the amount of taxes that their beneficiaries will have to pay.
Flexibility
Another massive purpose of having a living trust is the flexibility that it provides. Unlike a will, which is a static document, a trust can be changed at any time. This means that if your circumstances change, you can simply make changes to the trust rather than having to create a new one. This can be very beneficial if your finances change, your family dynamics are different, or if you simply want to change how your assets will be distributed. For example, you may have a child who gets married, and you want to extend your trust to include their new spouse, in-laws, or a new grandchild. This can be done without having to completely rewrite your trust or go through the process of creating a new one.
Control Your Assets
When you establish a living trust, you are able to name yourself as the trustee, which means you will retain control of your assets. This can be very important for people who want to make sure their assets are managed in a certain way or used for a specific purpose. For example, you may want to make sure that your assets are used to support your family or to pay for your children’s education. By naming yourself as the trustee, you can have complete control over how your assets are used. The reason that living trusts offer more control than wills is because trusts are not subject to probate, which means the court does not have to become involved in the distribution of assets. This, and the fact that trusts are private documents, gives trustees a great deal of control over how their assets are managed.
Contact The Law Office of Christopher P. Walker Today
A living trust can be an extremely beneficial estate planning tool, but it’s important to make sure that it is the right fit for your unique circumstances. If you’re considering creating a living trust, the best thing you can do is contact an estate planning trust attorney to help you understand all of your options and make sure that you make the best decision for your needs. At The Law Office of Christopher P. Walker, Attorney Walker has years of experience helping people with their estate planning needs, and he would be happy to help you too. Contact us today to schedule a consultation. We look forward to speaking with you.