03/06/2024
I’ve recommended to many the importance of having a living trust. If you still do not have one, please read below and hopefully you will understand the benefits.
1. A living trust avoids probate
Probate is the court-supervised process of distributing a deceased person's estate. Depending on the estate, as well as the assets and individuals involved in the state where you live, probate can become a lengthy and costly process, which may not only delay distributions to your beneficiaries but also cut down on what they inherit.
By placing your property in a living trust, however, you can avoid probate because the successor trustee distributes assets according to the trust creator's instructions without court intervention.
This can mean a faster distribution to your heirs—shortening the time frame from months or years to just weeks—without any additional expenses to the estate.
The avoidance of probate may be particularly helpful if you own property in another state, as it would pass directly to your beneficiary and not be subject to probate in that state (as long as title ownership to the property is in the trust).
2. A living trust may save money
As described above, a living trust can save money by avoiding probate expenses at your death.
Regarding the initial cost, though, making a living trust is likely to be more expensive than creating a last will and testament. A living trust is a more complex legal document that requires more actions because you also must “fund the trust" with your assets, that is, transfer ownership of your property to the trust.
Living trusts may provide savings for married couples in the form of joint living trusts.
3. A living trust protects your privacy
As mentioned above, one of the benefits of a trust is the avoidance of the probate process.
A living trust is a private document between the parties involved and does not become part of the public record. In other words, no one can later go and search public records to find out more about the distribution of your estate.
A will, on the other hand, is public record, so everything in it becomes public as well.
4. A living trust assists in the event of incapacitation
If you become ill or incapacitated, the person you have chosen as successor trustee can step in and manage your affairs without the intervention of a court. In this way, you can avoid a court-appointed conservatorship for your affairs—the kind that Britney Spears' father famously had over his daughter's affairs.
Moreover, since a living trust is revocable, you can dispute the implication that you are incapacitated and retain control of your own affairs.
5. A living trust provides certainty and peace of mind
When drawn up correctly, a living trust sets out a clear plan to deal with all of your assets. This can help prevent you from unintentionally disinheriting someone, can help you provide care for a loved one with special needs into the future, and even protect assets from certain people.
All of these things can give you peace of mind now, knowing that your estate will be handled exactly as you wish later. The existence of the trust can also provide certainty and comfort to your loved ones during an already stressful time because you've laid everything out for them.
Deciding which is better: a trust or a will
In choosing what is best for your estate—living trust vs. will—it is important to understand the differences between them.
The biggest difference is that a will has no effect on your property while you're still alive and only takes effect after your death.
A major benefit of the living trust is that it will not have to go through the probate process, as a will must do. But, in some states, the probate process is quick and inexpensive, so it really depends on your state and the types of assets you own. Also, keep in mind that a last will is simpler to set up and less expensive.
Note, though, that in conjunction with a living trust, you should have a “pour-over will" to catch any assets that have inadvertently been left out. This would ensure that your property doesn't fall subject to state intestacy laws, which mandate the distribution of assets not covered by a will or trust. The pour-over will does have to go through probate.
As described above, a will offers no privacy as it becomes public record. Your estate may also see cost savings with a trust as opposed to a will.
