When you are putting together your estate plan, you may assume that a will is all you need to ensure that your heirs get the property that you would like to leave them. Although this may be true in some cases, in others, it may be a good idea to make a living trust the center of your estate plan. Although there are many trusts to choose from to suit all needs, a particularly popular choice for individuals is a living trust.
What is a living trust?
A living trust is an arrangement where you as the settlor of the trust transfer your assets that you would like managed into the trust. The assets in the trust are managed by the trustee, who administers them according to the specifications you put in the trust documents. Once you die, your assets are distributed to the persons or institutions you specify according to the provisions of the trust.
Who may serve as trustee?
You can appoint any person you wish to be trustee, including yourself. Additionally, you may consider appointing a corporate trustee in cases where your estate is complex, or if you do not have the time or desire to manage your own assets. It is also important to appoint a successor trustee, who will serve as trustee if you should become incapacitated or unable to carry out your duties as trustee.
Can you change your mind?
A living trust is revocable, meaning that you can change its terms or cancel it at any time during your life. Additionally, if you name yourself as trustee, you retain full control of the assets within the trust.
What benefits does a living trust offer over a will?
A living trust can do many beneficial things that a will cannot do. Some of the main benefits include:
· Probate avoidance: Assets contained within a trust do not have to go through the lengthy and expensive procedure probate can be. Because of this, using a trust to distribute your assets can save your estate the time and money that it would have had to spend for probate. Additionally, a trust can ensure that your beneficiaries receive their inheritances much sooner.
· More privacy: Since probate is a court process, its proceedings are a matter of public record. As a result, just about anybody ca n view the documents filed with the court and learn the contents of your will and other specifics of your estate. However, since trusts avoid probate entirely, they allow you to keep this information secret.
· Greater control: Trusts can offer you greater control over how and when your assets are distributed to your beneficiaries. This can be especially useful if you have minor children or a spendthrift in the family. For example, you could designate your children to receive their shares only after completing college (or reaching other milestones in life). Otherwise, with a will, your beneficiaries would receive their inheritances, which they could then spend however they would like, as soon as they reach the age of majority.
Whether a living trust is a practical addition to your estate plan depends on several factors. As a result, it is helpful to consult with an experienced estate planning attorney to learn more about whether they would be a good fit for you.