The living trust has gained popularity as one of the finest estate planning tools, offering plenty of benefits. A living trust is a legal document in which you transfer your property’s ownership to the person that you trust most. That person is known as a “trustee” who is responsible for managing your property after your death.
A trustee is liable to manage your property according to your instructions, which can be beneficial for its beneficiaries. In this way, you can prevent your property from going through probate because it is not a part of your estate anymore after your death. You can manage your property through a revocable living trust when you are alive. Also, you can modify or cancel it anytime you want. According to a research study, over 20% of Americans have a living trust as an integral part of their estate planning. So, you may wonder why you should also have one.
Without any delay, let’s find out some benefits you can get by making a living trust.
1. Help in Avoiding Probate
Probate is the legal procedure in which the court authenticates a will. If you do not have a will, then the court has the right to distribute your assets according to state intestacy laws. One of the primary benefits of having a living trust is that your property does not have to go through probate. This process can be very expensive and lengthy, so having a living trust is a must. You can also leverage virtual platforms to set up your living trust online. It will allow you to make a living trust conveniently according to the laws of your state.
By avoiding probate, you can also allow your trustee to distribute your assets. It will help your family members access their inheritance quickly after your passing so they can manage their living expenses.
2. Protect Your Privacy
Another benefit of having a living trust is maintaining the privacy of your assets and estate plan. Whether you have a will or not, your property will go through public probate proceedings. On the other hand, if you have a living trust, then only concerned people will access your assets and estate information. It includes trustees and beneficiaries, so your living trust will remain private.
When your will is submitted to probate, it becomes a public record, but that is not the case with a living trust. Nobody can go through the public records to know about the distribution of your assets or estate.
3. Provide Security to Your Family
A living trust allows you and your spouse to create a “joint living trust.” It allows you to leave your property to your spouse if you pass away and vice versa. If you and your spouse die, then your property can be passed on to your children or beneficiaries. You can also nominate a trustee by using the living trust to protect your children. For example, a trustee can look after your property for your minor children until they enter adulthood.
Your appointed trustee can also distribute the inheritance to your children. The trustee can also manage the property of your grown-up children, who finds it hard to manage the finances and estate-related matters. It shows the significance of the trustee’s role. So, you need to find a person that you cannot only trust completely but someone who has good knowledge of finances and estate-related affairs.
4. Help to Save Money
Living trust plays a vital role in saving your money in different ways. As mentioned above, by avoiding the probate process, you can save the expenses of this lengthy and complex process. Also, a living trust can save your estate money as it can hold up better in situations if someone comes forward at the time of asset distribution. You may find the initial cost of living trust more expensive than a testament and last Will. But it will help you save the cost on other expenses that can impact your overall finances positively.
Another way that a living trust helps you save money is by making a joint living trust. It allows married couples to save money on estate tax. Although laws can vary according to state, married couples need to have a living trust if they want exceptions from heavy taxes.
5. Help in Case of Incapacitation
You never know when life is going to take a 360-degree turn, and you become incapacitated due to health issues or any unfortunate circumstances. In such a case, a living trust allows you to choose the trustee who can look after your matters without the court’s interference.
In this way, you do not have to deal with court-appointed conservatorship for your legal matters. Furthermore, you should know that living trust is revocable, so you can retain control of your matters by declaring that you are incapacitated.
6. Provides Peace of Mind
Having a living trust establishes a clear plan that helps you in managing your assets and estate-related affairs. Also, you can secure the future of your loved ones, and even after your death, they will have financial security.
When you set up a living trust in your life, you know that you have taken the proper measures for your family. You will have the assurance that your estate affairs will be managed according to your wish. It also ensures peace of mind for your family members because they know that they do not have to face any hardships in the future as you have made everything easier for them.
A living trust allows you to secure the future of your loved ones while you are alive. From avoiding probate to protecting your privacy, it provides different benefits that positively impact your finances. Especially for married couples, it is crucial to have a living trust that can help them save costs on estate taxes. Also, you never know when you will get incapacitated due to health issues, so living trust helps you to take measures in advance for such situations. Hopefully, this article will enlighten you about the benefits of making a living trust.