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For many people, a trust is a better choice than a will when considering estate planning. A living trust is essentially an arrangement under which the trustee holds legal title to assets for beneficiaries. You can be the trustee of your living trust, maintaining full control over all your property and assets until your death or incapacitation. A living trust is one created while you are alive, rather than one which is created upon your death, under the terms of your will. The primary advantage of having a living trust is to save money and time, as well as to maintain your privacy.
While a will must go through probate—and probate is a public process—the details of a living trust remain private. A living trust requires fewer expenses than a probate administration and is typically much quicker as well. Despite the fact that Americans, as a whole, are notorious for putting off estate planning, the living trust is an increasingly popular estate planning tool, with about one-fifth of all Americans now having a living trust as a part of their estate plan.
Once your living trust is created, you will “fund” it with your assets, meaning you will transfer ownership of all your assets and properties to your trust. If you also want to change beneficiaries on your life insurance, 401(k) or IRA, additional paperwork will be required.
Benefits of a Living Trust Over a Will
As noted, a living trust can allow your beneficiaries to avoid probate, which can be both lengthy and expensive. If you have a living trust, you will have a successor trustee who will distribute your assets according to your instructions, with no court intervention. This allows your heirs to receive their inheritance quicker—potentially in weeks, rath
er than months or years. If you happen to own property in another state, having a living trust is especially beneficial, as it avoids the need to go through probate in each state where you own property.
Although a living trust is usually more expensive in the beginning than a will, a living trust actually saves money by avoiding probate expenses when you die. Living trusts typically hold up better than a will if someone should contest the distribution, so if you have any inkling that someone might try to contest your estate plan, a living trust is a better option. If a married couple chooses to have a joint living trust, then there may be savings in estate and income taxes as well.
For some, the privacy benefits of a living trust are enough to convince them to include a living trust in their estate plan. The pleadings of a probate administration are public record. The living trust is a private document and does not require a probate administration. This means no one can search public records to determine how you chose to distribute your estate if you have a living trust.
Should you become incapacitated, a living trust is definitely the best choice to have in your estate plan. When you have your living trust prepared, you choose a successor trustee—someone you trust to handle your affairs in the manner you choose. If you become ill or incapacitated, this successor trustee will step in and handle your affairs—with no court intervention. Because living trusts are revocable, you will never find yourself in the position of someone claiming you are incapacitated when you are not—in other words, you always retain control of your own affairs.
Finally, a living trust gives you serious peace of mind, as a clear plan which will deal with all your assets in the manner you choose. Perhaps you need to ensure a loved one with special needs is properly cared for in the event of your death or incapacitation—a living trust will do that. Or perhaps you are worried that your wishes will not be carried out as you would like after your death—a living trust is much more likely to ensure your wishes will be carried out properly than a will. When you have a living trust added to your estate plan, you are, in essence, providing certainty and comfort to those you leave behind after your death.
Do You Need a Will and a Trust?
The biggest difference between a living trust and a will is that a will has no effect on your assets while you are alive, only kicking in after your death. A living trust, on the other hand, will ensure your assets are taken care of as you would wish if you become ill or incapacitated. That being said, many people also need a will in addition to a living trust—particularly those with minor children. Others may choose to have a “pour-over will” in addition to a living trust simply to “catch” any assets which may inadvertently been left out of the living trust.
A will is like a “backup plan” for any property which fails—for whatever reason—to be included in the living trust, or for new property you acquire which has not been added to the trust. If you have minor children, you need to be sure a guardian is named for those children, and a living trust cannot do this. For this reason, you will also need a will to ensure the person you would choose to raise your children in the event you were incapacitated or deceased is named.
Getting Legal Assistance for Your Living Trust
Although many people believe only those who are very wealthy need a living trust, in fact, a living trust can benefit those from all walks of life. It is important, however, to remember that unless your living trust is properly funded, it is, essentially, useless. A living trust only controls assets which have been placed into it. Because trusts can be complex, it is essential that you have an experienced Springfield, Ohio estate planning attorney to answer your questions and ensure your estate plan is properly prepared. The Lovett & House attorneys can help you determine the right documents for your estate plan and will ensure that everything in your estate plan is properly prepared. Contact a Springfield, Ohio attorney from Lovett & House to speak to a knowledgeable, experienced estate planning attorney.