If you are considering creating a living trust you may wonder about its benefits. A living trust serves many purposes and is very useful in estate planning. Your trust will help avoid probate and it provides for the financial needs of your family in the event of your death. Here are several of the other reasons to use a living trust.
There are two ways to design an irrevocable trust. You can make it yourself or you can hire an attorney to make it for you. A simple living trust can be established by executing a grantor trust or by executing a revocable deed. In a revocable deed, the assets are transferred in the same way as a mortgage. The grantor is considered the “trustor” and his assets are transferred in the same way that the trustee receives them. You can make this yourself, however, it makes much more sense to work with a qualified attorney to make your irrevocable trust.
Because your assets will be under the control of a trustee, you need to appoint an effective trustee to manage those assets. An irrevocable trust document can provide for this. Once the trust document has been executed, the trustee will manage the assets. It is important for you to have your trust attorney look over the plan and ask for any changes if necessary.
One reason to use a trust to avoid probate is because your estate will be handled much differently than if you had done it traditionally. Traditional wills leave decisions about the distribution of assets up to the individual beneficiary. The probate process delays and often stops the distribution of some assets until the probate is settled. This delay can cost thousands of dollars in legal fees for beneficiaries.
Another reason to use a trust for planning purposes is because it can give you control over how your assets will be distributed when you die. Unlike a traditional will, the trustee doesn’t have to review and approve the plan. Your trust can provide for a series of different distribution options, depending on the beneficiaries’ needs. Your beneficiaries can choose to get most of their inheritance immediately, or they can decide to receive the remainder over time, as interest income. They can also choose to divide the assets into regular payments, paid on a set schedule, or bequeathed directly to a charity or other chosen beneficiaries. If you plan ahead for your death, this can be much less complex and costly for your estate planning documents.
Some people might think that living trusts are expensive. However, because there’s no probate involved, the cost is often much less than probate itself. Trusts can also be executed in several different ways. If you decide to use a living trust, you’ll want an experienced trust attorney to help you out.
