A living trust is a type of legal tool designed to help you manage your personal property and real estate.
If executed correctly, it can minimize the legal complexity of transferring assets and potentially avoid probate court altogether.
But do the advantages make a living trust worth considering for everyone? And if not, who should use a living trust?
Article Contents
The Basics Of A Living Trust
According to Jon Alper, an attorney who specializes in estate planning and living trusts, a living trust “provides for the person who makes the trust, known as the settlor or grantor, during their lifetime…” and “the purpose of a Florida revocable living trust is to avoid probate, direct the distribution of assets after your death, and protect the assets from creditors of the beneficiaries.”
In other words, a living trust gives you the ability to smoothly and efficiently dictate the distribution of your assets after your death, all while you’re alive.
And a revocable living trust is alterable, meaning you’ll have the opportunity to make alterations for as long as you’re alive.
Do note that a living trust may function slightly differently, as dictated by local laws.
The Advantages Of A Living Trust
These are some of the biggest advantages of creating a living trust:
Maintaining Control
In a living trust, you’ll be able to maintain control for as long as you’re alive. If you acquire new assets, you’ll be able to direct how you want them to be distributed.
If you have changes to your intended beneficiaries, you can make alterations without an issue.
All you’ll need to do is talk to your lawyer, update your paperwork, and you’ll be good to go. Just keep in mind that not all types of trusts allow for these types of changes to be made.
Avoiding Guardianship
If the grantor of a living trust is incapacitated, the successor beneficiary takes over the administration of the property within the trust for the benefit of the grantor.
In other words, you can avoid the problem of guardianship. Of course, to take full advantage of this, you need to define incapacity in your trust document.
If you have an interest in avoiding guardianship, this is a major advantage.
Bypassing Probate
Probate is the legal process that typically must be completed when a person dies and their assets are distributed.
This process occurs regardless of whether or not a person has a will in place. But if you have a living trust in place, you may be able to bypass probate entirely, at least for the assets that are listed and directed in the trust.
Probate is often a long, complicated, and somewhat expensive process that most people would rather do without.
It can also cause significant chaos and personal problems within families if family members are forced to fight over the division of assets. But with a living trust, you can avoid it entirely.
Maintaining Government Benefits
n some cases, a trust can help you maintain government benefits. For example, if you’re currently receiving Medicaid benefits or Social Security income, you may be able to transfer those benefits to your living spouse after your death.
Just keep in mind that if your assets have value above a certain threshold, Social Security may deny that transfer of benefits.
Improving Business Succession
Living trusts are frequently associated with business succession planning, as they make it easy and convenient to transfer ownership of the business.
Not everyone has a business that requires succession planning, but this is an indispensable tool for those who need it.
Simplification Of Estate Planning
Overall, trusts make estate planning simpler. If you’re trying to plan your estate as conveniently and straightforwardly as possible, a trust may be the best way to do it.
Factors To Consider
There are several factors to consider when deciding whether a living trust is appropriate for you.
Your Assets
Trusts are commonly associated with wealthy people, but almost anyone can benefit from creating a trust if they have assets to distribute.
That said, the more assets you have, the more you should consider a trust, as the stakes of distribution are much higher.
Your Business
If you have a business in place, a living trust could be an excellent tool for succession planning. This is especially important for large and complicated businesses.
Your Benefits
If you have existing benefits from the government that you want to transfer to a spouse, a trust could help you do it. Just remember that not all benefits are eligible for transfer in all situations.
Your Beneficiaries
If you have many beneficiaries, and you want to make things easy on them, creating a trust could be the right move. It reduces complexity and stress associated with the process.
Your Motivation
There are many good reasons to want a trust, whether you want to ensure that your assets are distributed in a very specific way or you just want to make things simpler.
A living trust is a highly useful legal tool that can help you with everything from division of assets after your death to business succession planning.
If you have assets you want to make sure are distributed properly, or if you want to benefit from bypassing probate or retaining government benefits, it’s a good idea to talk to an estate planning lawyer as soon as possible.
