Clients always ask “Do I need a Living Trust or a Simple Will?
The answer depends on the goals of your estate.
A living trust can address several key flaws with a Will based estate plan. A living trust is a legal document that places property under your control into a legal entity called a trust for ownership purposes. That property stays in the trust during your lifetime and upon death is transferred to beneficiaries
1. A Living Trust avoids probate
A will transfers property upon death using the probate court system. However, if you place property into a living trust, that property is transferred upon your death using the trust provisions. The successor trustee would distribute property and pay off creditors in a much faster and efficient manor than probate.
2. A Living trust provides privacy
Unlike a Will a trust is not filed for public record. All property held within the trust is private. Only trustees have an accounting for property held legally within the trust.
3. Avoid multiple probates
If you own property in multiple states and pass using a will. Your executor will be forced to probate property in multiple states. However, if that property is held within a trust, the trustee would distribute property by the terms of the trust.
4. A trust can provide for incapacity.
A will only addresses situations after death. A Living trust can provide for trustees to pay expenses, invest or sell property held within the trust should you become incapacitated for any reason. If you become ill or incapacitated a Trustee can immediately step in and manage the trust assets.
5. A Living trust may actually save you money.
The upfront cost of a living trust may sound pricey. However, a properly drafted trust can eliminate problems with probate, incapacity and attorney fees that can pile up should you pass away or become incapacitated for a long period of time. Court costs and attorney fees can be taken from your estate likely draining many of the assets held within the trust.
6. Managing property for beneficiaries.
A trust can be designed to place property or assets given to beneficiaries in separate trusts for the beneficiaries benefit. This is a great feature to protect minor children, assets given to someone with special needs or to someone who may spend trust assets frivolously. Those assets can be placed into separate new trusts that the beneficiaries can attain a certain ages or under circumstances you deem necessary.