An important element of estate planning is ensuring the financial security of your family after you are gone. Like most people, we have worked our lifetime to provide financial stability for not only ourselves but our loved ones. An easy, burden-less way of providing for your loved ones is through a living trust.
As outlined here, a living trust holds many advantages compared to a will. Establishing a trust is fairly easily. Upon creating the living trust agreement, you essentially transfer a portion, or all, of your assets to a trustee. To retain control of the assets, people sometimes name themselves as the trustee. A grantor must name beneficiaries to the trust who will inherit the trust upon your death. Establishing a living trust bank account will allow you to solidify your savings while also easing any financial burden on your beneficiaries. The provisions of the trust can always be changed, or if you have second thoughts the entire trust can be revoked.
A living trust provides three important factors. Firstly, living trusts avoid the probate process. At the time of the person’s death, the assets of the trust will pass directly to the named beneficiaries. Secondly, living trust provide privacy that wills cannot by avoiding probate. A last will and testament that has been admitted to probate becomes a public record that anyone can freely see and read. In contrast, a living trust agreement, the property, and the beneficiaries remain private. Lastly, a living trust avoids a will contest. A living trust goes into effect the moment it is created, and a contestant must prove the grantor was incompetent or under the influence at the time the trust instrument was signed and the assets were transferred. This is a very hard, possibly impossible, burden to overcome.
Learn from the Celebrities
Superstar Whitney Houston died with a valid will, but a surprise to many is that she did not have a living trust. Therefore, the details of the final wishes were made public for the world to see. Anyone is able to look up how much money Houston had and who she left it to after her death. Along with providing some estate tax benefits, the legal document of a trust allows you to keep your final wishes private. On the other hand, it is likely Steve Jobs, Apple co-founder and billionaire, protected his estate with living trusts because no one has ever discovered the full extent of his estate planning! When living trust are used the right way – and assets are funded into them before death – families are protected by privacy.
Proper estate planning is extremely important, especially with complicated family dynamics, such as second-marriages or estranged family members. To minimize family disputes after your death, it is important to make your intentions clear in your estate planning.