Why You May Want a Living Trust

The majority of Americans understand the reasons why they need a will. After all, most adults are very familiar with wills, but less people understand living trusts. Often, estate planning attorneys hear people say, “If I have a will, why would I need a living trust?”

You may assume that you need and want a will, but a will may not be sufficient for you and your family. For starters, wills do not avoid probate when the decedent passes away. All wills must be authenticated (validated) in probate court before they can be effective.

Unlike revocable living trusts, wills only become enforceable after you die. This means that a will won’t provide you with any protection if you are seriously injured in an accident, or if you otherwise become physically or mentally incapable of making financial decisions for yourself. If you were to become incapacitated, the court can step in and take control of your assets while you’re still living.

Why would I want to avoid probate?

Probate is a court-supervised legal process where a personal representative (executor) is named to pay off your debts and taxes and distribute your remaining assets to your heirs, all according to the directions in your will.

If you die without a will (intestate), your assets will be distributed according to your state’s intestate succession laws. In this situation, generally a decedent’s assets are distributed to their closest living relatives, such as their spouse, children, and parents (if living) etc.

Why would I want to avoid probate?

  • When assets are tied up in probate, it can up to two years (sometimes longer) for them to be distributed to heirs.
  • Since probate cases are public, any “interested party” could find out what the decedent owed, who they owed it to, who will receive the decedent’s assets, and when. The probate process invites disgruntled heirs to contest a decedent’s will.
  • The decedent’s family does not control the probate process, the court does. The probate court in your local area determines how much it costs, how long it takes, and what information is available for the public to view.

What is a living trust?

Like a will, a living trust is a legal document that contains your specific instructions about what you want to happen to your assets after you pass away. Some of the major differences between a will and a trust are that a trust can avoid probate, it allows you to control your assets while you’re alive, it allows for a quicker distribution of assets to your heirs, and it prevents the court from taking over and controlling your assets if you become incapable of handling your estate.

You Maintain Control of Trust Assets

When you establish a living trust, you transfer your assets from your name to your trust, which you, the trustee, controls until your death. As the trustee of the trust, you maintain full control unless you become incapacitated or you die.

If you become incapacitated, the successor trustee that you named takes over and manages the trust on your behalf. When you pass away, your successor trustee settles your estate without interference from the court.

Unlike a will, your trust won’t necessarily die when you do. You can set up a trust where the trustee manages your assets until certain things happen, such as your beneficiaries reach a certain age, get married, or have children.

Should I have an attorney set up a living trust for me? Yes, but you don’t want a general practice attorney to do it – you want an estate planning and probate lawyer with considerable experience with living trusts to ensure the trust is prepared and funded correctly.

Is a revocable living trust right for you? To find out, speak with an estate planning attorney for the advice and professional guidance you need!