One of the most useful types of estate planning documents is a living trust. Though not as widely known as other estate planning documents such as a traditional will, a living trust is an attractive option for those who want to avoid the prolonged and expensive process of having their assets subjected to probate, while protecting their privacy by ensuring that the details of their assets are not made public after their death.
The purpose of living trusts
The use of a living trust, or inter vivos trust, allows one’s assets to be put into a trust for the duration of their life. When the trust is established, the trustor designates a successor trustee. The successor trustee has the legal power both to handle the assets of the trust in the event of incapacitation of the trustor and to distribute the assets of the trust to pre-selected beneficiaries when the trustor dies. Once the successor trustee has distributed all the assets of the trust to the beneficiaries, the trust ends.
Benefits of a living trust
There are several benefits to protecting your assets through a living trust. The biggest reason that living trusts are attractive to so many people is that with their use, the assets included in the trust avoid being subjected to probate, saving time and money. When a standard will or other estate planning document goes to probate after the death of the owner of the assets, the process is lengthy and expensive. Some assets may be tied up in probate for years, leaving the beneficiaries with nothing until the process is complete.
Further, the longer the probate process drags on, the more the assets are reduced because of the necessity of paying attorney fees and other probate-related costs. Many people find living trusts to be a better option because when the trustor dies, the successor trustee is immediately empowered by the living trust to disburse the assets to the beneficiaries, without any delay or extra costs that will deplete the financial value of the trust. Also, because a living trust is not subjected to probate, the contents are not made public. The privacy that a living trust provides is another reason why a trustor may prefer it over a traditional will.
Living trusts are an effective estate planning tool. By saving you time and money through the avoidance of probate, and protecting the privacy of your financial assets, you and your beneficiaries can greatly benefit from the use of a living trust.