Living trusts are an essential estate planning tool that many people use to protect their assets and provide for their loved ones. Unlike a will, a living trust allows you to control your property and assets while you are alive, and after you pass away.
Financial Bridge
The way I think about Living Trusts is they are like a financial bridge. By having a trust when you pass away the ownership of your assets is conveyed automatically from you to your beneficiaries. Or in other words ownership is bridged instantly between you and them. When you do this you benefit your estate immensely in multiple ways. Some of these benefits are outlined below.
1. Avoiding Probate
One of the most significant advantages of living trusts is they can help you avoid probate. Probate is the court-supervised process that occurs after someone passes away. During this process, the court will review your will and ensure that your assets are distributed according to your wishes. However, probate can be a lengthy and expensive process, and it can tie up your assets for months or even years. A living trust can help you avoid probate, allowing your loved ones to receive their inheritances faster and with fewer legal fees.
Many people don’t understand that a Will doesn’t avoid probate. A Will tells the court what you want to happen with your assets but the courts and attorneys still have to go through the probate process to execute your desires. I can tell you from experience that this process is long, expensive and frustrating.
2. Reduced Taxes
As I mentioned, the Trust bridges ownership of your assets to your heirs. This bridge could also help them to avoid substantial inheritance and property taxes depending on the size of your estate. But because ownership through the Trust is immediately transferred the IRS is limited on what they can tax.
3. Protect your Privacy
When you create a living trust, your assets are transferred to the trust, and the trust becomes the owner of your property. Because the trust is a private document, it does not become part of the public record, which means that your financial affairs will remain confidential. This is important if you want to keep your financial affairs private, or if you have concerns about identity theft or other forms of fraud.
4. Prepare for Incapacity
A living trust is also an excellent tool for providing for your incapacity. If you become incapacitated and are unable to manage your finances or make decisions for yourself, your trustee can step in and manage your affairs for you. This can help ensure that your bills are paid, your property is managed, and your loved ones are taken care of during your incapacity.
5. Here are some other benefits of living trusts:
- Living trusts can be amended or revoked at any time during your lifetime.
- Living trusts can be used to manage assets for minor children or disabled beneficiaries.
- Living trusts can help you avoid estate taxes and protect your assets from creditors.
Conclusion
A living trust is an excellent estate planning tool that can provide many benefits for you and your loved ones. Whether you want to avoid probate, protect your privacy, or provide for incapacity, a living trust can help you achieve your goals and ensure that your assets are distributed according to your wishes.
If you are interested in creating a living trust or updating your existing trust and would like a recommendation for an excellent attorney please let me know. We work with many incredible attorneys who can affordably help you put everything in its place.
Trevor Carlson
President – Equity Conversion Specialist
Heritage Reverse Mort.
435-359-9000
Heritage NMLS #1497455 Trevor’s NMLS #: 267962
1060 South Main Street Bldg. A Suite 101B
St George Utah 84770