How may I benefit from having a living trust?

You may have heard a lot of talk about living trusts lately, and while they may be a great strategy for planning in some cases, they are not for all situations and persons, however, generally this is the argument for it as a tool in the probate attorney's tool chest.

Some estate plans would benefit from having a living trust.

When you are considering your estate plan, you may believe that a will would take care of all of your needs. For many people, this is true. However, depending on your financial situation and personal goals, it may be a good idea to supplement your will with a trust.

A trust is a legal arrangement involving multiple parties. You designate certain property to belong to the trust. The property within the trust is managed by the trustee, who has a fiduciary duty to obey the specified terms of the trust and act in the best interests of the beneficiaries of the trust. Of course, you can designate both individuals and institutions as your beneficiaries. Likewise, you also have control over who serves as trustee. In some cases, you may even name yourself to serve in this role.

There are many types of trusts that serve different purposes. However, a living trust, also called an inter vivos trust, is a prevalent type of trust that can be created while you are still living. In general, this trust is revocable, which means that you can cancel the trust or amend the terms of it during your lifetime. The trust acts similarly to a will in that after you die, the assets within the trust are distributed to your beneficiaries in the manner that you specify in the document. However, trusts offer several advantages that a will alone does not.

Avoiding probate

Unlike wills, trust assets can be distributed without having to first clear the probate process. The need for probate can delay distribution of the assets under a will for up to years after your death. By avoiding the process completely, trust assets, on the other hand, can go to your beneficiaries much sooner after your death. Also, trusts avoid the expenses and court costs associated with the probate process, which can preserve more of your estate's assets for distribution.

If you own property in another state, if you only had a will, your estate would have to go through the probate process in the other state as well. This is known as ancillary probate. However, if you title your out-of-state property in a living trust, these proceedings may not be necessary, which can save your estate time and money.

Enhanced privacy

If you value the privacy of your estate, having a trust may be in your best interest. Since wills have to go through probate, their terms are a matter of public record. However, by skipping this process, trusts allow you to keep the terms of distribution, the value and liabilities of your estate, and the identities of your beneficiaries a secret.

More flexibility

A trust simply allows you more flexibility with regard to the distribution of your assets than a will does. With a trust, you have almost total control over the time and manner of distribution. This is especially useful if your beneficiaries include minor children. With a will, your children would receive their inheritances when they turn 18, which may not be what you want. However, a trust allows you to delay distribution to them until an age or event (e.g. finishing college) of your choosing is reached.

Speak to an attorney

Although trusts sound like a good idea, their feasibility depends largely on your goals and how your estate is situated. To learn more about whether they would be a good addition to your will, speak to an experienced estate planning attorney. An attorney can review your estate and recommend the best and most efficient way of carrying out your wishes.