A living trust, also known as a “revocable trust,” is an estate planning document that offers myriad benefits to its creator. These benefits can apply both during their lifetime as well as upon their passing. This type of trust provides more protection for an individual and their estate than a will can provide. A living trust document can still be amended or canceled by the trust creator, ensuring that the individual retains control.
Keeping all of this in mind, the following will outline the many benefits of a living trust.
Setting Up a Trust:
It is a good idea to consult an attorney about the process of setting up a trust and whether it is beneficial for you. An important part of establishing your trust is funding it. This means that the assets belonging to your estate are put into the trust. It’s essential to ensure that this process happens, as your assets are not protected simply by creating your trust.
An established trust serves to:
1. Protect Your Children
Establishing a trust is an excellent way to take proactive steps in protecting your children. If they are minors upon your passing, a trustee will be designated to manage the assets in trust until your children reach adulthood and are deemed mature enough to manage the assets themselves.
Likewise, if your kids are adults but you already know they lack the maturity or have issues that would prevent them from properly managing the assets themselves, your trust agreement will provide a trustee to manage the funds for them.
2. Manage Beneficiary Designations
If you aren’t thrilled with the son or daughter-in-law that has married into your family, putting your assets in a trust allows you to keep the assets in your bloodline.
3. Avoid Probate
Having your assets in the trust will allow your executor and estate to avoid the probate process, which is overseen by the courts for the purpose of transferring assets to beneficiaries. This process can be costly, both in time and finances. The result is delayed or reduced asset distributions for your beneficiaries.
However, if you have established and funded your trust, your assets will transfer directly to your named beneficiaries and avoid probate altogether. This allows your estate and the individuals named in your trust to maintain privacy, as the trust administration process is not a public affair overseen by the government. There is no need for any public record or requirement for the trust document to be filed with the state or county you live in.
4. Save Money
Although initially more expensive to establish than a will, a living trust can save money in the long run. Married couples can save money in their estate planning by establishing a joint revocable living trust rather than individual ones. Money is saved by avoiding a probate process upon your passing.
If you are interested in establishing a trust that provides more in-depth tax planning, helping to reduce estate tax and income taxes, you should consider an irrevocable trust.
5. Provide Peace of Mind
Setting up your living trust provides many different benefits,most importantly, providing peace of mind for you and your loved ones. The trust provides a clear plan to be followed by your successor trustee in the unfortunate event of your incapacitation or passing.
Ready to Establish a Revocable Living Trust?
For many individuals, the long-term benefits of a trust, both during your lifetime and upon your passing, make it a wise choice over establishing just a will.
Sue is an Arizona attorney with over 30 years of experience. She can advise you in proper planning for both your future and the future of your loved ones. Contact her law firm today to schedule your free estate planning consultation!