As you get older, it is important to start planning ahead and thinking about how you will handle your estate. While no one likes to think about the inevitable, unfortunately it is a part of life. Estate planning, while something that can take a lot of time, doesn’t have to be a complicated process. It is something that everyone has to think about, whether they are planning on passing any of their assets onto their heirs or not.
A living trust is a helpful planning tool that will allow you to pass assets to your heirs as well as take care of you in the event that you become incapacitated unexpectedly, explains Don Robinson of ABC. For many, forming a living trust is a way for individuals to avoid probate, and may offer before death and after death advantages. So what are some of the advantages of creating a living trust?
Avoid Probate
Many people choose to create a living trust in order to avoid the legal process of probate. Probate is the first step that is taken after someone has passed in order to resolve any claims that may be made against the will before the property can be distributed to the heirs. When a person establishes a trust, and includes all of their assets in the living trust, they are able to pass to the beneficiaries after the trustee’s death without having to go through the process of probate, explains Jay Romano of the NY Times.
Doesn’t Become Public Record
When you are in the process of creating all of your estate planning documents, they are all kept private as long as you are alive. The moment you become decease however, if you have a will, it must be filed with the local probate court, automatically making it a public record. With a living trust, you don’t ever have to file the document with a court, either before or after your death, according to the Nolo website. Since your assets don’t have to go through probate, the person that you named as your trustee, without having to get permission from the courts, handles the distribution of your assets in private.
Protects Your Property
This goes along with being able to avoid probate. If you own multiple homes that are located in different states, placing those homes in your living trust can help to keep them out of probate. If you have questions on what property to place in your living trust the experts can help you decide. They can show you how best to set up your living trust in order to protect the property that you have worked so hard to obtain.
Reduce Taxes
Anytime someone who owns more than $650,000 worth of property dies, his or her estate is taxed. If you or your spouse expects to own that much, or more, property creating a living trust can save your estate from going through probate and save on the federal estate tax after your death, explains the Inc. website. If you fail to set up a living trust, your estate will be saddled with a huge estate tax bill after both of your deaths since the original survivor’s estate includes his or her share of the couple’s property plus everything they inherited from the deceased spouse.
Gives You More Control
When you create a living trust, you have complete control over when your beneficiaries gain control of their inheritance. Unlike when you set up a will, you can stipulate in the trust documents that your heirs can’t access the majority of the assets until a certain time when they can be financially responsible. If you are leaving your estate to your grandchildren, you can make sure that they can’t access the inheritance until they are mature enough to handle the responsibility of the finances. With a living trust you get to set the stipulations as to when the money and assets can be accessed.
No one likes to think about his or her death. But in order to make sure that your assets and estate are handled correctly it is important to take care of your estate planning before it is too late. A helpful tool in estate planning that is becoming more popular as the baby boomers are entering into retirement is the living trust. With the living trusts, they can have more control over their estates while they are alive, and be able to continue to use their assets if they are suddenly incapacitated. Creating a living trust also keeps more of their estate out of the hands of the government and allows their heirs to gain access to their inheritance quicker by avoiding probate.
