Sitting down with one’s family to discuss the future of one’s assets can seem like a daunting experience. Planning one’s estate may seem final and cumbersome to those who have growing assets with many moving parts.
A living, or revocable trust is meant to solve these problems. Flexible, very powerful and highly adaptable instruments, living trusts are a great asset that can be included when planning your estate.
What a living trust does
Living trusts are established during the owner’s life and can be maintained by the owner or other named trustees. The purpose of the living trust is to create an easy path for one’s assets to be more seamlessly passed down to the estate’s beneficiaries.
It also allows for the trust to be funded when the owner chooses to make the transfer. In this way, the assets do not need to be set aside in advance; however, they do need to be transferred at some point in order for the living trust to take effect.
There are a number of reasons to establish a living trust. The main reason is that it allows the beneficiaries to avoid going through the process of authenticating a will, known as probate, and appointing someone to make decisions for the owner when incapacitated – called a guardianship.
A living trust is also especially useful for transferring certain types of assets such as for multi-state real estate ownership which reduces future complications. The living trust also removes the need for probate in this as well as other circumstances.
Other reasons to establish a living trust
A living trust is considered to be a private document instead of a public record, allowing the owner and family to maintain some semblance of privacy with regard to their wealth and worth. It can also be amended more easily than a will, allowing for flexibility when determining beneficiaries and funding.
Similar to speaking with a financial advisor, an experienced estate planning attorney can help determine whether a living trust is the best method for protecting one’s assets as part of a comprehensive estate plan.