Although it is very difficult for some to think about preparing for their own death, it is important to make the decisions that will best support your loved ones quickly and in the most cost effective manner. While most people know of the importance for estate planning, many do not understand the differences between a will and a living trust. There are many advantages of allowing a living trust to control the disposition of your estate, instead of a will.
The greatest benefit of a living trust is the avoidance of probate. This document is very much like a will in that you instruct how your final affairs are handled and who you want to receive your assets after you die. But unlike a will, a living trust does not go through probate and it gives you, not the courts, control over you assets. In probate, the process takes between 9 months and 2 years before your heirs can inherit. With a living trust, it is dramatically quicker and only takes weeks, generally. If you own property in other states, a living trust is especially advantageous, because you will avoid multiple probates.
In addition to being very lengthy, probate can be quite costly. Probate administration is often estimated to cost between 3 and 10% of the estate’s value. By creating a living trust and opting out of the probate system, you can avoid expensive court costs and legal fees. Living trusts are easy to set up, maintain, and can be changed or canceled at any time. Also, they are more difficult than a will to contest, because it requires such a person to file a civil lawsuit.
In the case of becoming physically or mentally incapacitated, a living trust prevents court control of your assets. In probate, a person must be appointed by the court to oversee your care, keep detailed records, and report to the court for approval of all expenses. In contrast, if you and your spouse are acting as the trustees of your own living trust and one of you becomes disabled or incompetent, the other trustee can easily replace the disabled settlor as trustee without court-administered guardianship proceedings. This can save the family a great deal of money, and reduce the stress and anxiety associated with guardianship. A child or trusted friend or relative can serve if you are unmarried or if your spouse cannot serve. With a living trust, you select a successor trustee to manage your financial affairs according to the instructions that you provide in the trust.
There are many other benefits of having a living trust over a will. Unlike a will, which is a matter of public record, living trusts allow your family to take care of your financial affairs privately. This can allow your family to be protected against disgruntled heirs and unscrupulous solicitors. Not only does it allow for quicker distribution of your assets to your beneficiaries, a living trust prevents the court from controlling assets when minor children inherit and can also prevent unintentional disinheriting. If your situation involves business management, a living trust can provide a smooth transition of ownership from you to the successor trustee of your choice.
A living trust can give you maximum control while you are living and after you die. It allows you to dispense of your property quickly, cost effectively, and in the manner that you choose. It is a powerful instrument that gives you control over who will administer your estate, instead of some court that will take a great deal more time and money in the process. A living trust might save your estate a lot of money that would otherwise be spent on estate and income taxes. Not only does a living trust give you the control and flexibility you want over the management of your estate, it gives you the peace of mind you need to feel secure over your loved ones’ future.