A living trust is a legal document an individual creates during their lifetime. The grantor (the person who creates the trust, also known as the trustor) transfers all the property they own to a trustee who manages the deceased’s assets for the beneficiaries. It is called a living trust because it is set up while the grantor is alive. A living trust can also be revocable or irrevocable. The difference is that you can amend a revocable trust, but cannot change an irrevocable trust, once you sign it. Most people prefer a revocable trust. There are various reasons to consider creating a living trust in your lifetime, some of which are listed below.
- Less extra cost
If you have a spouse, setting up a living trust can help to reduce after-death tax payments, especially if it is a joint living trust. This also depends on the value of your estate at the time of your death. Also, all the costs of any legal proceedings are deducted from your estate. You can avoid these extra cost deductions from your estates if you have set up and funded a properly planned living trust.
- Avoid probate
Probate is a lengthy legal process that the court supervises. This procedure usually helps avoid any fraud in the distribution and management of assets after death. If you don’t think things through and plan the distribution of your estate, then your estate will go through the process of probate. It is usually difficult for your loved ones to deal with complex legalities after you pass away. The best and safest measure you can take to ensure proper distribution after your lifetime is creating a living trust to avoid legal proceedings.
- More privacy for your loved ones
A Will is a public document, and if there are any probate proceedings related to your Will, they will all be part of the public record. But if you want to avoid gathering too much public attention, consider setting up a living trust. A living trust is a private document. The details of your assets, their distribution, and the names of the beneficiaries remain hidden from the public eye. No one will disclose your private matters.
- Provides protection even during your lifetime
Creating a living trust is a wise way to plan in case of uncertainties. For example, if you become disabled or die in an accident, your trustee will be able to manage your assets for your beneficiaries. The court will not have to intervene to ensure that your assets are being managed/passed on correctly. This is especially beneficial for people who don’t have any close family and friends to look after their property after they die.
- Protect the minors in your family
Life is unpredictable, and anything can happen at any time. If you’re leaving behind young children, they may not be responsible enough to take care of a large amount of money. Setting up a living trust will keep the funds secure for them to use appropriately in the future. They’ll be accessible to your kids once they come of age. Without such a document in place, the minors in your family will suffer the most as they will not fight for what’s rightfully theirs.
- Protecting your adult children
If you have older kids who are physically or mentally unable to handle property or money independently, a trustee can help. They will always need someone to rely upon or check over them and how they are spending the money. Also, one can never trust children with habits like substance abuse or other behavioral issues with any inheritance. Setting up a living trust enables you to entrust the money management for your adult children to the trustee. The trustee holds on to the money for them and dispenses it over time when they need it.
- Safekeeping of your assets
There are many circumstances where you need to take action to protect what’s yours. For example, imagine you have a strained relationship with your child’s spouse, and you do not trust them whatsoever. Would you want half of your estate to fall into the hands of that person? Absolutely not! Setting up a living trust will always work in your favor and protect your interests at all times.
- Stop your children from fighting over your estate
In case of your untimely demise, you will leave all your hard-earned money to your children. They may not be mature enough to act rationally when it comes to dividing assets fairly. If you do not divide your estate beforehand, it can create a rift between your children. They may fight each other over the distribution and end up becoming each other enemies. To keep your family united, you need to plan ahead and divide all your wealth equally among your children during your lifetime so they never get the chance to fight over inheritance issues.
To create a living trust, you can contact a reliable law firm. Choose a firm that has relevant experience. Although a living trust is not something that can ease the pain of losing a loved one, it can make things less complicated after their death. The last thing anyone wants is to get tangled up in a legal mess over real estate, bank accounts, and other investments. This article highlights a few reasons why setting up a living trust is a wise idea. It is private, secure, and allows for proper management of your assets after you pass over. More importantly, it can help to keep your family bonded.