When it comes to estate planning, for some, a will is all that is needed in order to accomplish their goals. However, for others, it may be beneficial to supplement the will with a trust.
There are several types of trusts to choose from. However, one very popular choice is an
inter vivos or
living trust. As the name suggests, this type of trust is created during your lifetime and is revocable. This means that the trust may be amended or canceled at any time while you are alive. After your death, the assets that you put in the trust are distributed according to the provisions contained within the trust documents. Living trusts are not the right fit for everyone, but if at least one of the three following things is true, they may be a good option for you.
You would like to avoid probate
Probably the biggest reason to consider adding a living trust to your estate plan is that it would allow you to avoid
probate. Put simply, probate is the process where a court examines the decedent’s will, determines whether it is valid and ensures that the assets are distributed according to the will’s terms. Although this process sounds harmless, it is very complex and lengthy, lasting at least a year after the decedent’s death. It is also expensive for the estate, as it involves estate administrators and attorneys. Since trusts do not have to go through this process, your beneficiaries can receive their inheritances much sooner, at a fraction of the cost to your estate.
Living trusts are also useful if you own property that is located outside your state. This is because if you only had a will disposing of the out-of-state property, the property may have to clear probate in the jurisdiction in which it is located. This would involve hiring another attorney licensed in the state where the property is located to represent you (which would also be more expensive for your estate). However, titling your out-of-state in a living trust can completely avoid the need for this.
Privacy is paramount to you
Probate proceeds are court proceedings. As such, they are matters of public record. Because of this, anyone has the right to view the content of your will and other sensitive documents filed during the probate process. If you would like to keep this personal aspect of your life private, a living trust may be beneficial. Since trusts do not need to be probated, you can keep the specifics of your estate a secret from the public.
You value control over distribution
Living trusts give you more control over how and when your property is transferred to your heirs and beneficiaries than wills do. If you have minor children in your family, this aspect of trusts can be very attractive. For example, a living trust would allow you to delay distributing inheritances to your children until they reach a certain age or accomplished a specific condition (e.g. graduate college). Likewise, you may specify that the assets in the trust be used only to fund specific reasons for your children or beneficiaries (e.g. using assets only to fund their college expenses) If, on the other hand, you used a will, your children would receive their full inheritances when they turn 18 in most cases.
An attorney can help you decide
A living trust may or may not be a viable addition to your estate, depending on your goals and financial situation. However, an experienced estate planning attorney can advise you further on whether adding a trust to your estate plan is feasible.