Many people simply do their best to avoid estate planning because it involves making difficult decisions. It’s hard enough to consider one’s own mortality, but also deciding who should receive what once you pass may be a bridge too far for some.
However, regardless of age or wealth, it’s wise to plan for the distribution of your assets in the event of your passing. A basic estate plan starts with a Will and an Advance Healthcare Directive. If you already have these two critical documents in place, it’s time to consider establishing a Living Trust.
Today, we’re going to talk about what a Living Trust is, go over the types of Living Trusts, consider whether or not you may need one, and discuss how to get started.
What Is A Living Trust?
A Living Trust, also commonly referred to as a Revocable Living Trust, is a legal entity that you can transfer and hold valuable assets such as bank accounts, investments, real estate, and other valuable property. In a Living Trust, you, as the grantor, designate a successor trustee who is responsible for distributing assets after your death.
In the same way a Will does, a Living Trust stipulates your wishes regarding your assets, dependents, and heirs. The main difference between a Will and a Living Trust is that a Will only becomes effective upon the individual’s death, and it enters probate. A Living Trust bypasses the extensive probate process and allows your trustee (who also serves as the executor of your Will) to enforce the instructions you left in your Living Trust.
Also, if you were to become incapacitated or unable to manage your healthcare, financial, and legal affairs, the trustee would be responsible for handling these delicate matters for you.
What Are The Main Types Of Living Trusts?
There are two different types of Living Trusts.
1. Irrevocable Trust
In an Irrevocable Trust, you may permanently and irrevocably transfer assets away to your beneficiaries or heirs during your lifetime. It’s important to know that when you transfer assets to an irrevocable trust, you permanently relinquish your control of them.
The trust becomes the owner of the assets, and you’ll have to register the assets in the trust’s name. Since you no longer own these assets, they have no bearing on your estate value, and you won’t be responsible for the taxes they incur. Establishing an Irrevocable Trust is only ideal in extreme circumstances.
2. Revocable Living Trust
Unlike an Irrevocable Trust, when you transfer your assets to a Revocable Trust, you retain ownership and control of the assets as the trustee. You can add and remove assets as you see fit or terminate the revocable trust when you want. The assets in a Revocable Living Trust pass on to the beneficiaries upon your death without them having to go through the probate process.
Advantages Of Establishing A Living Trust
There are several benefits to using a Living Trust.
1. Avoid Costly Probate Process
People mainly use a Living Trust in their estate plan because it eliminates the probate process. Probate is a time-consuming and lengthy judicial process in which the heirs or beneficiaries have to prove the validity of a will. The assets transferred to a Living Trust can be immediately distributed after your death.
2. Offers Privacy
One of the most significant advantages of a living will is that it provides privacy.
A will is a public document that just about anyone can access and possibly contest. Probate is also a very public legal process that allows everyone to see the details of your estate.
3. Plans For Incapacity Loss
Unforeseen occurrences are a reality of life. In a Living Trust, you can designate a successor trustee who will take over your affairs if you should ever become incapacitated. Suppose you are ever in a severe accident or develop a chronic illness that leaves you in a position where you cannot manage your assets. In that case, the successor trustee will take over without having to appeal to the courts.
Do You Need A Living Trust?
A Living Trust isn’t practical for everyone, but it can significantly benefit special circumstances. If you own many assets, have properties in different states, or perhaps have a blended family where things can quickly become complicated, setting up a Living Trust can eliminate problems with distributing your assets upon your death.
A Living Will is ideal for unmarried individuals whose personal wishes can’t be fulfilled by a surviving spouse or through the designation of beneficiaries. A Living Trust ensures that your assets are distributed as you desire and that the transfer process is simple and stress-free for your heirs.
Valley Divorce Services Living Trust Lawyers
Some people may put off creating or updating their Will or Living Trust because they believe their loved ones will automatically get their inheritance. This isn’t always true.
At Valley Divorce Services, we want to help you look after your loved ones and give them an easy roadmap to follow after you pass away. With 20 years of legal experience, we know precisely how to provide expert legal document assistance that will give you and your loved one’s peace of mind.
With Valley Divorce Services’ professional legal guidance, It’s easier than ever to make a Will that works for you. From family law to estate planning, our legal document preparation services offer an affordable option for legal document help!
Request a free legal consultation today for more information on how we can help you plan for the future.