Living Trusts
Can a Revocable Living Trust Can Help You and Your Heirs?
Most advisors will tell you it’s important to plan now for the orderly transfer of your assets after your death, and that the earlier you plan the better. But let’s face it, most of us aren’t terribly eager to plan for our disability or demise.
Some people consider estate planning complicated, intimidating and an exercise for the wealthy. Moreover Wills and Trusts can conjure up images of musty old documents written in barely understandable English with a flock of contesting heirs
Regardless of your perceptions, there’s one type of trust—a revocable living Trust—that can benefit you during your lifetime and, upon your death, help ensure that your assets go directly to the people you’ve designated.
The initial cost of setting up a living trust may be more than that for a Will, but in the long run a trust may save you in other ways, not least of all by giving you peace of mind. And with a living trust, you—as trustee of the trust—are in control, generally free to use and move assets at any time.
The best way to understand why you need a living trust is to look at what happens without one. If you die without leaving instructions for the distribution of your estate—either through a will or a living trust—the fate of your assets will be determined by state laws rather than by your wishes.
Wills have their limitations
Traditionally, wills have been the primary tool that people use to distribute assets according to their wishes. But wills have some major limitations.
1 A will must go through probate, the legal process used to value your estate, settle any debts, pay taxes and transfer assets to your heirs. Probate can be costly and time-consuming, the exact opposite of what your family needs when dealing with the loss of a loved one.
2. A will is a public document, subject to scrutiny by anyone who wishes to know its contents. If someone feels they have been treated unfairly, they can contest the will. Even if they fail to break the will, such challenges can tie up your assets for months or even years, and cost your estate thousands of dollars in legal fees.
A living Trust offers additional advantages
A living Trust helps you avoid these problems and offers a level of flexibility and control that a will alone cannot. Assets held in a living trust are not subject to probate, which means they go directly and immediately to your heirs upon your death. Because living trusts are private documents, they are generally more difficult to challenge than a will.
