Estate planning is not a ‘one size fits all’ situation. Depending on your specific situation, you may require different documents and planning strategies than someone else. A living trust is a document that may be extremely beneficial to your situation.
While you may already have a last will and testament, a trust can bring additional security to your property and assets, as well as ensure your beneficiaries receive everything they are entitled to once you pass.
What is a living trust?
According to The Balance, trusts are created to keep your property and assets safe and secure. In a revocable trust, you remain the primary holder of the property and assets in the trust.You may dictate how you would like them disbursed and revise your wishes at any point. In an irrevocable trust, however, the terms of the document are set in stone once the trust is finalized.
The property and assets left in a trust are directly transferred to the beneficiary once the trustee passes.
What are the benefits of the trust?
Property named in a last will and testament may be required to enter the probate process before items are finally disbursed to the designated beneficiaries. Items in a trust, on the other hand, may bypass the probate process altogether. Other benefits of a trust include the following:
- Kept private and are not matters of public record
- Avoid estate taxes or additional taxes and fees, as assets are directly transferred
- Avoid guardianship if you should become incapacitated.
You can organize a trust to pay out in one lump sum or in payments over a period of time. It can also keep the assets until a certain date. For example, if the beneficiary is a child, you can dictate that you wish the child to be paid out when he or she is 21 years old. You can also say that you want the trust money to be used for education payments.