What Living Trusts Do And Don’t Do
Living Trusts are legal documents that allow individuals to manage their assets during their lifetime and distribute them to their chosen beneficiaries after their death. Living Trusts can help avoid probate court and keep financial affairs private. However, Living Trusts may not cover all assets, require ongoing management, and do not replace the need for a will or other estate planning documents.
A living trust can provide several benefits, such as:
Avoiding Probate: A Living Trust allows the assets the trust owns to pass directly to beneficiaries without probate court, which can be time-consuming and costly.
Managing Assets: A Living Trust enables the grantor (the person creating the trust) to manage their assets. At the same time, they are alive and provide a plan for managing those assets in the event of incapacity.
Providing Privacy: Unlike probate, a Living Trust can help keep financial affairs private, as it does not become a public record.
Offering Flexibility: A Living Trust can be tailored to the grantor’s needs and goals, allowing for specific provisions for beneficiaries, such as staggered distributions or special needs trusts.
Minimizing Estate Taxes: A Living Trust can minimize estate taxes for larger estates, although this may not be necessary for more modest estates.
Here are some things you need to know about living trusts:
Even if you have a living trust, you must still have a will. Wills are like safety nets that capture potentially forgotten assets and bring them into your trust.
Living trusts and living wills are not the same. Living wills are for medical affairs, and living trusts are for financial affairs.
A trust differs from a will because it does not necessarily terminate upon your death. Your chosen trustee can continue to manage the assets held within the trust until your intended beneficiaries reach the age(s) you designated them to receive their inheritance.