There are several components to an estate plan, one of them being a living trust. Common benefits that prompt someone to create a living trust include increased privacy, reduced taxes, probate avoidance, and caring for family members with special needs. A living trust also lets you dictate how and when your assets will pass on to future generations after your death.
Avoiding Probate and Increasing Privacy
One of the primary reasons for creating an estate plan is to avoid probate. Unlike a will, a properly funded living trust will avoid probate, the lengthy and costly court-supervised process of transferring assets after death. Probate includes locating and determining the value of the deceased’s assets, paying off any outstanding bills and taxes, and then distributing the remaining value of the estate to the deceased’s rightful beneficiaries or heirs. Avoiding probate is often a top reason for estate planning, and there is no surprise as to why. First, probate can be a costly way to transfer your assets upon death. Second, it is very time-consuming for your family. It can take a year (or even longer) to complete the probate process. Complications, such as a contested will or an inability to find clear records of all of the deceased’s assets and debts, can extend this timeline. Finally, probate proceedings are a matter of public record so when your estate goes through this process, there is no privacy.
Reducing Taxes
While a living trust can help you avoid probate, it can also provide you with tax savings, especially if your estate is subject to death taxes (also known as estate and gift taxes). Of course, there are many types of trusts. One way to think about the variety is to consider a toolbox. For example, there are numerous kinds of screwdrivers, hammers, power tools, and so on. Each tool has an intended use. Trusts are no different. When you work with a family trust attorney, you ensure the type of trust is aligned with the tax-saving needs and other goals of your family.
Seeking Professional Help
It is important to understand that a trust only controls assets that are funded to the trust. In other words, you must place these assets in the trust – commonly referred to as “funding” the trust. Moreover, because our lives are always changing (marriage, childbirth, home purchase, etc.) and so are tax laws, it is essential to continually update and monitor the funding of your trust over your lifetime. For these reasons, you will want to work closely with your family trust attorney to make sure your assets are properly aligned with your trust. This will not only help you get organized, but it will also make things much easier for your heirs when you pass away. And you don’t have to go it alone. The right attorney can be an invaluable help to you and your family.
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