You already know that planning your financial future is a vital part of creating a comfortable, sustainable life. But how do you know exactly when to take what steps? Creating a living trust might seem like something your parents should do, but maybe it’s time to create to protect your own assets.
Living Trust vs. Will
Wondering about the difference between a living trust and a will? You’re not alone! A living trust is a bit different from a traditional will—this legal document bestows a carefully chosen trustee with the important responsibility of managing an individual’s assets while they’re still alive.
The three main differences between the two:
- Privacy. Wills are a matter of public record, meaning they can be read by anyone who wishes to see them. Living trusts maintain your privacy—only the intended beneficiaries have permission to look at these documents.
- Prepare for Mental Incapabilities. In the chance that you become unable to manage your affairs while you’re still alive, your appointee takes them over, as dictated by your wishes. You can choose what triggers this to happen, and how you’d like your affairs handled.
- Skip Court. While most wills require the court to get involved (in a step called probate), living trust conveniently skip that step. Of course, in rare cases, the courts do have to get involved in living trust disputes.
The Benefits of Creating a Living Trust
A living trust allows you to put your wishes into place while you’re still alive and without court interference. This is particularly useful if you think your will might be contested or you worry about your assets being passed down correctly.
Let’s take a look at an example: Mary is a 65-year-old widow living in Texas with one adult daughter. She has worked professionally all of her life running a small business which her daughter will supposedly inherit.
- She passes unexpectedly without a living trust. It’s unclear who is supposed to take over the business, which becomes tangled up in legal disputes, causing massive disruptions.
- She passes unexpectedly with a living trust and her business goes directly to the named beneficiary (her daughter) without issue. An emotional time is made easier without the hardship or cost of lengthy legal battles.
Revocable Living Trust vs. Irrevocable Living Trust
When you decide to create your living trust, you have two options. A revocable living trust can be changed or revoked at any point. Meanwhile, an irrevocable trust is nearly impossible to alter.
Your chosen financial institution can help you make an educated decision about which option is best for you and your portfolio, as well as the needs of your family.
What are the Disadvantages of a Living Trust?
Living trusts can be pricey, especially as they take continued management. Furthermore, you want to be particular about how you set yours up. Partner with a trusted financial institution that knows the ins and outs of your individual state’s unique laws. The last thing you want to do is create a living trust that isn’t able to execute your wishes when the time comes.
Create a Living Trust with Trajan Wealth
Currently, only 40% of Americans have a will or a living trust set up. This means in the event of an untimely death, there is less control over their assets. If you’re thinking you’re an exception to the rule, consider your life today as well as your prized possessions. How would you feel if you couldn’t pass on those items to the ones you love? Or if your wishes were caught up in litigation for years after your death?
If you think a revocable living trust is in your best interest, now is the time to start the process. Add it to your list of things to do in the New Year! A simple appointment with one of our experts and you’ll be on your way to a secure financial future. Schedule a consultation today.
