Estate planning is rarely on top of anyone’s bucket list. However, taking charge of your legacy is a gift to your family and should be done sooner rather than later. A recent article from The Motley Fool explains why a living trust should be part of your estate plan. The title says it all: “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family.”
At its essence, a trust is a way for one person to own and manage another person’s property or even to manage their property. The IRS definition of a trust is as follows: “In general, a trust is a relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of another.”
A living trust requires you (the grantor) to transfer assets. If you manage the trust yourself, you are also the trustee. This lets you make all decisions for the trust while leaving instructions in a particular language for distribution by a successor trustee (or two successor trustees) after you pass away.
Having the correct language is essential for the trust to achieve your goals, which is best prepared by an experienced estate planning attorney. They will know how the laws of your jurisdiction treat trusts and what language must be included for the trust to be valid.
Property can also be distributed through a last will and testament. However, there are several advantages to using a living trust.
Trusts avoid the time and costs of probate. During probate, the court supervises the distribution of assets. It takes time—months or, depending on the complexity of the estate, years. During this time, heirs don’t have access to assets, which they may have been counting on to pay for final expenses or maintain a home.
Trusts keep your life and death private. Once a will is filed with the court, it becomes a public document. Anyone who wants to can review its contents. Creditors, ex-spouses, estranged family members, and salespeople can all review the will. This is why phone calls and mailings from realtors and financial advisors after a death in the family often besiege loved ones. Trusts remain private and are only reviewed by the trustee and, in some cases, beneficiaries.
Revocable trusts are flexible. While a revocable trust doesn’t provide the same level of tax protection as an irrevocable trust, it allows you, as the grantor, to make changes. You can add or delete beneficiaries, move assets in or out of the trust, and change your appointed successor trustees.
If you want to ensure the financial stability of your loved ones after your departure, we can assist you. Contact The Werner Law Firm living trust lawyers in Frisco for a free consultation!
If you have any questions, schedule a free appointment with us through our online appointment page.
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Reference: The Motley Fool (Feb. 12, 2024) “3 Reasons to Seriously Consider Using a Living Trust to Pass Inheritance to Your Family”
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