Should You Get a Living Trust? A living trust is a legal document that allows your assets to be put into a trust and handled the way you choose during your lifetime. When you eventually pass on, the assets will be transferred to your beneficiaries without the need to go through probate court.
Living Trusts: How Do They Work?
A living trust:
- Gives the trustee the right to make decisions about how to manage your assets.
- Lists the beneficiaries who will receive the assets when you pass away.
- Provides specific guidelines on how the trustee must manage and distribute your assets.
One of the most attractive features of a living trust is that it will allow beneficiaries to receive assets after your death without the need for probate court. If you set up a regular will, then your loved ones will need to go through court proceedings to determine how the assets will be distributed. There’s nothing inherently wrong with this option, but it can take some time. Probate court has been known to take years in cases where there are disagreements about the legality of the will or the distribution of assets.
Financial Planning: Can a Living Trust Save You Money?
You’ll need to spend a little money if you want to hire a living trust lawyer to set up your trust. However, the trust will likely save money in the long run. The costs for probate court are withdrawn from the estate and could affect what your beneficiaries receive in the end. A living trust will also be more legally viable if someone tries to contest how your assets will be handled after your death. For example, if you name some family members as beneficiaries in a will but not others, those unnamed family members may attempt to contest the distribution. If so, court could go on much longer and incur more costs. If you think your beneficiaries could face a fight after your death, a living trust is the best option for keeping things simple and saving them money.
A Lack of Need: Should Everyone Get a Living Trust?
Not everyone requires a living trust. If you have no significant assets to leave behind, you likely don’t need to worry about it. The legal definition of significant assets would be assets that add up to $150,000 or above. Married couples who don’t have children and fully intend to leave everything they own to each other at the time of their passing most likely do not need a living trust. The exception would be if they would like one for privacy reasons as we’ll discuss below.
Keeping it in the Family: Is a Living Trust Private?
If you have a regular will, the details of your estate will be made public after your death. When a living trust is in place, the distribution of assets remains private. If your family is in the public eye or you value privacy in general, this might be reason enough to go for the living trust.
A Trustworthy Person: Who Should You Choose as a Trustee?
The most common way to set up a living trust is to deem yourself the trustee. However, you can also choose someone else if you like. Choosing someone else can benefit you if you suffer from a severe disability or health problem that may someday leave you unable to make decisions for yourself. For example, if you are in the early stages of dementia and know that you will struggle more and more over time, it could be wise to choose a trustee who can handle major decisions that might come up. This is obviously a decision you don’t want to make lightly. The trustee holds a position of confidence and will be subject to high standards for conduct. A close family member is probably your best bet.
Will or Will Not: Is a Will Required for a Living Trust?
Since we’ve been comparing living trusts and wills, you might think that you can have a trust without a will, but that is incorrect. You can have a will without a trust, but not the reverse. Your will covers any assets that aren’t in your name when you pass away and may not be listed in your living trust for various reasons. When there is both a will and living trust, the will typically contains what is known as a pour-over provision. This provision legally states that all assets will be transferred to your trustee if you pass away. It covers loopholes that could potentially leave certain assets up for grabs.
A Living Trust Lawyer: How Do You Set Up a Living Trust?
If you’ve decided to set up a living trust, your next step is finding a living trust attorney. An attorney is needed because living trusts can be complex, and you don’t want to set things up incorrectly and cause your beneficiaries trouble later on. That said, not every living trust attorney is equal. It’s important to only seek advice from attorneys with experience related to estate planning. Always discuss qualifications before making a decision to work with a lawyer. Citadel Law has proudly served the community for more than 25 years. Our experienced team of attorneys are ready to help you get started with setting up a living trust. Contact us today for more information.