The key to effective estate planning
Why Create A Living Trust
For most people, the first step in estate planning is to create a will, but there are more comprehensive options. A revocable living trust can provide you with many benefits that are not available with a will.
A will communicates how you would like your assets to be distributed upon death and who you want to administer your estate.
A revocable living trust (sometimes called an inter-vivos trust) is similar in that it does all this. However, it also allows you to retain control of your estate before and after your death.
Key benefits of A Living Trust
There are some important benefits of setting up a revocable living trust as opposed to a will, namely:
- No probate: Unlike a Will (for assets over $75,000), assets included in a revocable living trust are not subject to probate. This avoids possible delays of months or even years, as well as expensive executor and legal fees. A successor (named in the living trust document) is able to administer your estate to transition your assets.
- Ability to plan for disability: If you become unable to effectively look after your estate or become incapacitated due to mental disability your named successor can manage your financial affairs without the expense and delays associated with further legal work. A Will on its own won’t allow this and your loved ones would have to ask the court to appoint a conservator to manage your financial affairs.
- Greater privacy: If privacy is important to you or your beneficiaries, a revocable living trust is more secure than a Will as it remains a private document. A Will, on the other hand, will be a matter of public record because it must be filed with the probate court.
One more Question
Why Revocable Vs. An Irrevocable trust?
A revocable trust and living trust describe the same thing: a trust in which the terms can be changed at any time. An irrevocable trust is a trust that cannot be modified after it is created without the consent of the beneficiaries.
An irrevocable trust is available as an alternative estate planning vehicle. The main differences between a revocable and irrevocable trust are:
- Lack of flexibility in an irrevocable trust – once it is set up, it is more difficult to change. Assets cannot generally be taken back.
- If you are sued, a revocable trust offers no protection from creditors: the assets in the trust are considered to be owned by you. An irrevocable trust on the other hand can protect your assets from creditors.
- An irrevocable trust removes the value of the property from the estate, so estate taxes apply if your net worth is larger than the applicable estate tax exemption.
These differences are one of the areas where our expert estate attorneys can provide guidance. Hiring a lawyer experienced in setting up living trusts and other aspects of your estate plan will help you choose the best personal options.
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