ESTATE PLANNING

1. A last will and testament: A legal document that designates someone in charge of your estate after you pass away and how you’d like that person to divide up your assets.
2. A living trust: A legal entity established during your lifetime that holds your assets and designates someone to manage and disburse them based on rules specified in the trust document.

While they sound similar, they each have unique characteristics that can make one more advantageous than the other. For many people, a living trust could provide a lot of benefits for both themselves and their families. Here are three reasons you should seriously consider using one to plan your estate.

1. You can maintain your privacy

A will is often required to go through probate, a court-supervised process that reviews the deceased person’s assets and provides a final ruling on their distribution. Since it’s a matter of the court, it becomes public information. That makes it possible in some jurisdictions for just about anyone to see exactly what you wrote in your will, who received your assets, and how much they were worth.

That might not be a big deal for some, but if you value your loved ones’ privacy, it may be worth paying to set up a trust fund for them. Even if it costs more upfront, your heirs can avoid the costs of probate, which are potentially even more expensive.

A trust avoids probate and remains private. Only you, the trustee, and the beneficiaries will know how you chose to distribute your assets after death.

2. Your loved ones might not have to wait as long

Since a trust doesn’t typically have to go through the probate process, it may be possible for the trustee to make asset disbursements much faster. Often, the executor of a will has to file the will for probate, wait for the probate process, and then he or she can carry out the will.

With a trust, the trustee is often able to implement the terms of the trust more quickly. That can be a big deal for loved ones, especially if they incurred substantial expenses in your passing away — hospital bills, funeral bills, etc. If they were relying on an inheritance to pay those bills, the faster they receive it, the better off they’ll be.

3. You can arrange for money management if you’re incapacitated

Perhaps the biggest advantage a living trust has over a will is its value during your lifetime. A will doesn’t take effect until your death, but you can arrange to have a successor trustee take over managing the trust if you’re unable or unwilling to keep serving as the trustee.  

Without a living trust, you can name a person under a durable power of attorney to be able to manage your financial affairs if you’re unable to do so. However, the process of having financial institutions recognize the person holding your durable power of attorney can sometimes be burdensome. 

Changing the trustee, on the other hand, doesn’t affect the trust’s status as a separate legal entity. The successor trustee can step in directly, and financial institutions will generally be on notice since the initial trust document specifies who the successor would be.

Is a living trust for you?

A living trust is a great tool to use to pass on your wealth to your loved ones.

The probate process can be long and expensive and makes a lot of your information publicly available. But some people, especially those with straightforward wills, may not need or see the value in an estate plan.   However, an estate plan will also protect you if you become incapacitated due to illness, mental infirmity, or debilitating injury. If you have minor children, you need to consider naming guardians to take care of and protect them.  Also, if you are the caretaker of a person with special needs or an elderly relative, an estate plan ensuring that they will be taken care of is a must.

There are a lot of pros to establishing a living trust for your loved ones. Schedule a consultation with the Gill Law Firm to ensure that you are making the right decision for your personal situation.