As you create your estate plan, you will have multiple options for how you leave your assets. As you explore the ways you can leave your inheritance, you will probably try to develop a plan that’s cost-effective while being easy for your family.
One tool you can use to leave your inheritance is a living trust. When you create a living trust, you create a separate entity that follows your rules for how to handle your inheritance. Here are a few ways a living trust can benefit you:
- Keep your inheritance out of probate – After you pass away, you want your family to receive your inheritance as soon as possible. But if you don’t plan ahead or you only use a will, all of your assets go through probate court. Probate can take a long time and is easy to challenge. A living trust avoids probate, giving your inheritance directly to your family.
- Keep your affairs out of public record – Anything brought through probate court becomes public record. Once your estate goes into probate, anyone can see your will. However, a trust stays private, protecting your financial information from prying eyes.
- Keep control over your assets – If you end up becoming incapacitated, a court can assign you an expensive guardian to manage your assets. However, if you set up a living trust, you can choose who manages the trust if you cannot. This allows you to control who has access to your assets.
A living trust is not a full estate plan
While a living trust can be an important part of your estate plan, it is not the only part of the plan. When you create a living trust, you must sign over all your assets to it. This means shifting over titles, deeds, bank accounts and more. If you forget something, or don’t have time to shift it over, you must have a will that puts any leftover assets into your trust. And some assets, like retirement accounts, cannot go into a trust.
Speaking with an attorney can help you create an estate plan that wisely incorporates a living trust. Or if a living trust isn’t right for you, you can explore other options for leaving your inheritance.