Regardless of your age, it is always a good idea to start planning for what will happen with your assets and property at the end of your life. If something should happen to you, you don’t want to leave the burden on your family or end up with an outcome you didn’t intend, which is why it is recommended to start your basic estate planning as early as possible.
Basic estate planning often includes a will, as well as a health care directive which helps medical professionals understand your wishes if you face a life-threatening situation. These basic documents are sometimes accompanied by a living trust, but this is not always necessary. Let’s discuss what exactly a living trust is and why you might consider having one.
What is a living trust?
A living trust is an estate planning document that puts your assets in a trust during your lifetime and outlines where these assets should go when you die. Most living trusts are revocable, meaning you can get rid of it or alter it at any time while you are living.
As a part of the living trust, you will appoint yourself the trustee, which gives you complete control over your assets and which ones are included in your trust. You will also appoint a successor trustee who will represent you upon your death and handle the transfer of assets from the trust to your beneficiaries. They are also entitled to act on your behalf should you become unable to manage the trust or your assets while alive.
What are the advantages of a living trust?
The major advantage of a living trust is that a living trust can be created, altered, and managed without involvement with the courts, unlike a will. With a will, it must go through probate which involves valuing your estate, settling debts, paying taxes, etc. There are costs and time associated with this process that many people simply do not want to deal with.
Another advantage is the additional privacy a living trust provides over a will. A will is a public document and available for anyone to view, including all of the details of your estate. A living trust is entirely private and, therefore, difficult to challenge.
What are the drawbacks of a living trust?
A potential drawback to setting up a living trust is cost. There are some cheap online options, but when it comes to estate planning, it is best to work with a trained estate planning attorney who understands all of the nuances of the process.
While attorneys’ fees will vary based on your personal situation, many of them offer a basic trust setup package for a flat fee as long as your case is not too complicated. At a minimum, expect to pay at least $1000 for the creation of a living trust by a reputable attorney.
You can save time and money by being prepared with a list of the assets you’d like to place in the trust, as well as where you want assets to be transferred to upon your death.
What else should you know about living trusts?
When moving your assets into our trust, you must retitle your property and accounts with the name of the trust in order to receive the benefits. As a backup, we also recommend creating a pour-over will that allows any assets not in the trust at the time of death to be included.
Contact Moseman Law Today!
A living trust is a good option for certain financial situations but is not for everyone. If you’d like to discuss your particular situation and learn about your estate planning options, contact our team at Moseman Law Office today to set up a consultation.