The Biggest Benefits of a Living Trust
It is a potentially grave assumption to only think of a living trust as a means to avoid probate. There are many reasons and ways a living trust can be utilized in your long-term estate planning, regardless of the size of your estate. To be able to determine if a living trust is an appropriate planning vehicle for you, you must first understand what a living trust can accomplish.
Revocable Living Trust Benefits
- Avoid Probate
This is the most common reason people seem to choose a living trust. Why do you want to avoid probate? Probate is the process of having a will proved and processed through a court of law. This can be an inconvenient process. In addition, estates that are settled in probate also become part of the public record, which means the terms of the deceased’s will become public. Although probate in Arizona is not as problematic as it is in other states, why burden your loved ones with the additional work needed for a probate?
- Protect Assets for Your Children/Minor Beneficiaries
If you have minor children who will receive your assets on your death, a living trust is an easy way to leave money to them. You can lay out the terms upon which the assets will be spent for your children’s benefit and ultimately distributed to your children. A living trust provides you with the opportunity to appoint someone you trust to look out for your children’s inheritance and best interests. A living trust gives you the chance to legally and explicitly set the terms of the inheritance.
- Minimize Estate Taxes
You can have over $10,000,000 as a couple without owing federal estate tax when you die. Arizona does not have death tax either. However, if you have more than ten million dollars, a living trust is a great way to save on estate taxes. Language can be added into a living trust to help prevent a large estate tax bill. If you have less than $10,000,000, there is no need to worry about federal estate tax.
- Addresses Estate Needs in the Event of Incapacity
A living trust allows you the opportunity to address the issue of your possible incapacity by nominating a successor trustee. This trustee will be responsible for managing your estate and finances in the event you are unable to make decisions yourself. The caveat is that your property must be placed in the trust for your successor trustee to be able to manage it.
- Maintain Your Privacy and Help Eliminate Estate Contests
Living trusts are typically contested far less often than wills. The biggest reason for this is the privacy that is involved with a living trust. When you die with a will, it may be required to go through probate and as such any interested party is privy to all of the details of the will. A living trust keeps all of your wishes and terms of distribution to beneficiaries known only to the trustee and beneficiaries of the estate.
While the considerations above are all very valid reasons for using a revocable living trust, you may still be wondering, is a living trust worth the time and trouble for a relatively small estate? This is a fair question and one that is not easily answered unless you meet with an experienced professional and weigh out all of your options.
Revocable Living Trusts: Arizona
Current laws regarding revocable living trusts are state-specific and can change over time. In Arizona, one of the main points is that it is a community property state. The laws are different for community property and non-community property states.
If you decide to do a living trust, make certain that you also have a pour over will. A pour over will helps ensure that any items that did not get linked with your living trust are linked when you die. That way, the trustee of your trust has authority over all of your assets and can follow all of the terms of distribution laid out in your living trust.
The best way to determine what estate planning documents you need is to first identify your wishes. Once you have figured out your estate planning goals and priorities, you should seek out a living trust lawyer. I can counsel you on the most efficient way to achieve your goals and get your questions—such as how much does a living trust cost—answered. Reach out to me today to set up a complimentary meeting to talk about estate planning, living trusts and more.