Do you need a plan to smoothly transfer your assets while protecting your family from lengthy and costly legal battles? That’s just what a living trust can accomplish. A simple will typically need to go through probate—a public process that can take a long time. A living trust is a private way to manage and distribute wealth and generally is quicker.
A living trust has many advantages, including avoiding the time and expense of probate and keeping your financial affairs private. It ensures you can customize asset distribution per your needs, protects your wealth in case of incapacity, and assists in avoiding and preventing conflicts among families. With these advantages, a living trust makes estate planning easy and comfortable for an individual.
Ever wondered how to keep your assets safe, private, and out of the court’s hands? Protect your family’s future with professional guidance from Fales Law Group. With years of trusted experience in wills, trusts, and probate-avoidance strategies, we’ll help you create a seamless, stress-free estate plan. Contact us today for a personalized consultation and secure your legacy with confidence.
In this blog, we’ll explore the key benefits of living trust and why it could be the ideal solution for your estate planning needs. Whether you’re looking to avoid probate, maintain privacy, or simply have peace of mind, a living trust offers advantages that make it a powerful tool for families.
What Is a Living Trust?
A living trust is a very effective method for handling your property while alive and transferring it when you die. It is a contract between you, as the person who is transferring something (also referred to as the grantor), and another person to whom you are giving control, known as the trustee.
You can also participate in the process as your own trustee if, for instance, you are still healthy and strong. This kind of trust minimizes the chances of your family going through the legal procedure known as probate. Probate is time-consuming, expensive and involves the disclosure of information and thus is something which many people will try to avoid.
Living trust means your property can be passed on to your loved ones without the court’s interference. The trust document is where everything is put down. It provides information such as the assets and money you have placed in a trust. It also discusses who will continue to manage the trust and who will benefit from the trust after your death. You can also name a successor trustee who will step in to manage the trust if you cannot.
Living trusts aren’t just for the wealthy. It’s beneficial for those who would like more convenient ways of managing property. It is a simplistic strategy to ensure you are armed to face future events affecting your dearest ones.
Types of Living Trusts
There are two main types of living trusts:
- Revocable
- Irrevocable.
All have their roles provided by the form of grant depending on the level of discretion the grantor requires and the extent of protection required for the assets.
Revocable Living Trust
One of the most common types of trust among the two is the revocable living trust. The grantor (the person who creates the trust) retains full rights of authority over the trust property. At the same time, they can also be the trustee because, as the creator, they primarily handle the assets while the person is still independent.
Additionally, the grantor has the right and power to do anything they want concerning the trust. This may include varying the beneficiaries, removing the trustee, or even completely revoking the very trust and terminating it.
Another popular reason for establishing a revocable living trust is to provide for possible disability. If the grantor becomes incapacitated or sick, there is a provision to appoint a new trustee to take over the grantor’s responsibilities.
Moreover, revocable living trust assets also remain part of the grantor’s estate for tax purposes. Therefore, they are liable for taxes while they are alive. However, asset transfers to the trust do not change the tax rate. The typical grantor trust, however, becomes irrevocable on the grantor’s death.
Irrevocable Living Trust
An irrevocable living trust is, in fact, quite different from an ordinary living trust. The grantor loses ownership of the placed assets once the grantor has created the trust. The trust holds assets, and the grantor cannot change the terms or revoke the property. Amendments to the trust can only be made under certain conditions with the court’s permission.
There are a lot of advantages to using an irrevocable living trust, but the most profound is the shield and protection of the assets. Since the trust owns the property, it cannot be seized for legal reasons or against the owner’s wish, such as in case of legal suits, claims, or by creditors.
Furthermore, the grantor can reduce the value of the taxable estate by transferring assets out of their estate.
6 Benefits of Living Trust:
Living trust possesses many benefits that make the process of estate planning easier and more effective. Following are some of the benefits of living trusts.
Living Trusts help to avoid the Probate Process.
Property held in a trust does not necessarily require probate, a legal proceeding after a person’s death overseen by the courts.
Probates are a costly, tedious, and public process filed in court, while a trust remains confidential and is worked out by the trustee. Therefore, if you set up the trust. At the same time, you are alive, your assets are transferred to the rightful beneficiaries quickly and without revealing all your business to the public when the Will goes to probate.
You can also state in your will clause that after your death, a trust should be established; however, this will have probate first before the trust is formed. Out of all these benefits, privacy and the ability to dodge legal procedures involved in probate are key reasons individuals create trust.
Also, you can specify who will be the beneficiary of any property not included in the trust at the time of the grantor’s death. As a result, the transition of the assets will be relatively painless and non-public.
Living Trusts Can Provide Tax Benefits
Both revocable and irrevocable trusts come with different tax repercussions with regard to the setting of the trusts.
Revocable trust lets you alter the terms once it’s set up, and it doesn’t come with many advantages concerning taxes while you’re alive. However, they are transferred to the trustee, as with the case with revocable trusts, the property in the trust is still considered as your property for tax purposes.
An irrevocable trust, however, can present potential tax benefits to its creator or grantor. Assets held in an irrevocable trust cannot revert to you and, therefore, keep you from paying estate taxes upon your demise.
Gifts made to the trust may be subject to gift tax during your lifetime, but the assets, as well as the appreciation, if any, are exempt from estate tax.
Living Trusts Will Keep Your Personal Matters Private
Wills are taken through the public process known as probate, which allows anyone to view them. This leads to interference from people like neighbors, family members, or even bill collectors when they notice the activity. As you all know, nowadays, everyone has access to the internet so anyone can access your last will at any moment.
Meanwhile, living trusts are not public in nature. They do not go through the process of probate, and therefore, not even notaries have access to the contents of a trust unless the creator or the trustee wishes to show them to the beneficiaries.
Living Trusts Are Harder To Contest In Court
Will have a higher vulnerability to lawsuits than living trusts since the latter protects the interest of the trust more. A Will only comes into existence in a situation where a person dies. Additionally, it can be challenged by any divergent interested persons by proving that the person who made the Will was mentally unfit or pressured into it.
But a living trust can get to work immediately if the two of you sign on the dotted line. To contest it, one must show that the creator was incapable when signing the trust. Not only that they would also need to prove that they were incapable at the time of acquisition of every asset, during decision-making, and at the time of distributing the property. This makes it a lot more difficult to challenge than a Will.
Living Trusts Can Help Your Family Save Money
One of the primary advantages of a living trust is that it does not go through probate, and as a result, it can take less money to handle than a Will.
Probate can be costly, provided there are intra-family issues, or someone demands an alteration of the Will. Nonetheless, disinherited relatives may frustrate and/or prolong the probate process to get a larger slice of the intended portion.
A living trust does not go through this process and will help you to avoid these additional expenses. Hence a less complicated and costly affair to your beneficiaries.
Living Trust Helps If You Become Incapacitated
If the grantor becomes incapacitated and gets a sickness of the mind or the body, the successor trustee is responsible for administrating the trust property without the court’s interference.
This eliminates situations where someone has to be appointed by the court to look after and manage an individual’s affairs.
Since the living trust can be revised, the trust also provides the tools to deny any allegations of incompetence and retain the power in case of being mentally capable again.
Who Needs a Living Trust?
Living trusts are not limited to the rich or those with complex financial portfolios and estates. It’s a financial planning strategy that every individual planning for the future should consider. Following are some of the people who need a living trust.
Families with Children or Dependents
If you have kids, especially those still young, through a living trust, you can guarantee they are well taken care of should you pass on. It lets you lay conditions regarding when and how they will receive the inheritance. Thus, it will allow you to determine their future effectively.
People Who Want Privacy
The living trust, as opposed to the Will, when it goes through probate, doesn’t make your financial details available to the public. It means that if privacy and the non-disclosure of the family’s property are important to you, the living trust will be helpful.
Those Planning for Incapacity
A living trust can help if you are worried about who will handle your finances in case of incapacity. It allows you to choose a particular individual to come and manage your properties on your behalf without going to court.
Secure your future and protect your loved ones with a living trust.
A living trust is a very effective strategy of estate planning since it’s kept private, can’t be contested and many more assets can be distributed much easier and swiftly than through probate. It saves you from the public and expensive procedure of probate, assists you in explaining your wishes in case you are incapacitated, and gives you and your family members confidence. That is why a living trust allows you, the property owner, to take back control of the property and plan for the future, assuring that your assets will be distributed as you wish.
If you’re ready to take control of your estate and ensure your loved ones are cared for, consider creating a living trust. Contact Fales Law Group today for professional guidance and personalized estate planning solutions to secure your family’s future.
