Estate Planning: Is a Living Trust for You?
Believe it or not, you have an estate. In fact, virtually everyone does. It encompasses a variety of assets—your car, home, checking and savings account, investments, and personal valuables. Despite how large or modest, everyone has something in common—you can’t take them with you when you die.
To ensure desired distribution, in the event of your incapacitation or passing, you’ll have to plan ahead. While sometimes, more is better, the wide range of options can make the decision that more daunting. To help determine if a living trust is best suited for you, this post will highlight the benefits and disadvantages.
What is a Living Trust?
This form of estate planning entails a legal document being drafted, transferring the title of a designated property to a trustee, who agrees to safekeep that asset for a beneficiary, per the terms of the agreement.
Upon death of the settlor, these valuables flow to the beneficiary, according to the grantor’s wishes, as outlined in the document.
1) Avoiding Probate—this is probably the biggest benefit of a living trust. As a legal entity existing separately from you, it continues to exist, even after you’re gone (inter vivos). In other words, your loved ones will avoid lengthy proceedings, that can follow suit, even with a will. The seamless transition entitles the beneficiary to immediate access, during what may a financially strapping time.
2) Bypassing Guardianship: if you become incapacitated, your loved ones will be able to take control of the outlined assets without interference by a judge. In fact, this provision can be of more value than avoiding probate! While the latter entails a fixed period of time, usually one to two years; guardianship can last indefinitely.
3) Superior to Power of Attorney: while this other form of estate planning is equally viable, a living trust boast benefits the former can’t.
· It’s recognized in all 50 states.
· If your trustee has become incapacitated or worse, passed away, it will contain detailed provisions for how to select a successor.
· It’s recognized by banks and brokerage houses, unlike powers of attorney, that may be challenged or ignored.
1) Up Front Costs are Hefty—it will cost more to set up and fund a living trust than it will to have us draft a last will and testament. However, what you save in choosing another option, your loved ones may be forced to pay down the road: a costly court-supervised guardianship if you become disabled, and expensive probate proceedings, after you die.
2) You May Still Need a Last Will and Testament: if your trust isn’t fully funded, you’ll need a special will, allowing your unfunded assets to “pour” in—another form of estate planning forcing probate law to play a part.
While the provided information may be sufficient to make up your mind, nothing substitutes legal advice. To determine if a living trust is the best option for you, procure Pierro, Connor and Associates’ expertise.