Many people believe a will or a trust are only for the wealthy. This could not be further from the truth. A last will involves a distribution of your estate in which the court reviews and charges probate, which can be time-consuming and expensive. A living trust avoids the probate process if you transfer funds and homes into the trust, prior to your passing. Building a living trust can be time-consuming at first, but makes the process for your loved ones much easier. It is a much better plan to take the hardship of planning for your family’s future then to allow mistakes and misuse of your belongings to occur.
Reasons to Start a Living Trust
There are many reasons you should consider a living trust. There are type types a revocable trust, which you can amend or revoke when you wish. An irrevocable trust cannot be changed, so be very careful with this type. Irrevocable trusts are often for the very wealthy, who are trying to avoid estate tax those who have high profile jobs that could be sued. No one can get to these funds, even the courts.
Reduce Estate Taxes – A living trust can save a ton of money in estate taxes after the second spouse dies. Probate can tie up a house, which then cannot be sold and the taxes can be very high. Upfront preparation can take a little time and money, but it will be so worth it in the end.
Protects Minors – A trust can hold money for minor children until they are responsible enough to hand the money themselves. Many living trusts hold money and stagger payments at 25, 30, and 35 years of age to ensure their heirs do not waste the money on large purchases all at once.
Protects Adults – Even some adults are not responsible for themselves, due to mental, drug or alcohol problems. Therefore, a trustee can be appointed to distribute money as seen fit for an extended period of time.
Keeps Assets in the Family – A trust can keep money specifically for your family and in the event of divorce, in-laws will be excluded from benefitting from the trust.
Avoid Probate – Transferring bank accounts and homes to a living trust is something an estate planner can help with and you can still access these accounts while you are alive. This protects your property from the taxes and time of a court to distribute assets.
Privacy – Wills are a matter of public record and a list of your financial assets can be published for everyone to see. Living trusts are private documents that are not subject to public record. This keeps your family protected.
Protect Yourself – Remember that you may become incapacitated at some point and it is a good idea to already have a trustee appointed to ensure that everything goes as you desire. They will already know what your wishes are and the trust will be in place.