WHAT IS A LIVING TRUST, AND IS IT RIGHT FOR YOUR ESTATE PLAN?
A revocable living trust is one of the most commonly used estate planning tools. It allows the trust’s creator, the grantor, to remain involved and in control of the trust during their lifetime. And after they’ve passed on, the trust will be passed to a successor trustee so that beneficiaries may continue to benefit from the trust’s creation.
However, like all estate planning measures, living trusts have their unique pros and cons. It could be that a revocable living trust is precisely the right option for you. But to better determine that, let us first go over some of the advantages and disadvantages of living trusts.
WHAT ARE THE ADVANTAGES OF LIVING TRUSTS?
The pros of creating a living trust include:
- Avoid Probate and Maintain Privacy: Unlike a will, a trust does not need to pass through the probate process after your death. Probate court can take a long time, cost a lot of money, and is an entirely public process.
- Long-Term Financial Control Over Your Estate: Your estate does not need to distribute all of your assets immediately after your death. A living trust can include language which stipulates how and when certain assets are distributed to your beneficiaries.
- Avoid Court-Appointed Conservatorship: When someone becomes incapacitated and they do not have a living trust, the court could appoint a representative to manage the incapacitated individual’s financial matters. A living trust would avoid this by passing the trust on to a successor trustee.
WHAT ARE THE DISADVANTAGES OF LIVING TRUSTS?
The cons of creating a living trust include:
- No Protection from Estate Taxes: Putting assets into a revocable trust does not protect them from estate taxes.
- No Asset Protection from Creditors: Asset protection is not afforded to items in a revocable trust, as the grantor still has ownership of those assets.
- You’ll Likely Still Need to Take Other Estate Planning Measures: Some assets simply cannot be put into a trust. For this and other reasons, you may need additional estate planning tools in place to make sure that everything is taken care of.
WHICH ASSETS SHOULD BE PUT IN A LIVING TRUST?
The assets which you should consider putting into your trust may include:
- Real Estate: Your family home may be the biggest asset you own, and it stands to reason you would want to protect it from probate courts.
- Financial Assets: Certain accounts may be put into a living trust, including stocks and bonds, mutual fund accounts, annuities, and checking and savings accounts.
- Valuables: Certain valuable personal items should be considered for inclusion in your trust, including jewelry, art, antiques, and furniture.
Additionally, motor vehicles, patents, copyrights, precious metals, and small business interests could be worth putting into a trust. Contact our law firm today at (720) 420-1039 to learn more about how we can help you with your situation.