Mark Jakubik of the Pennsylvania Estate Planning Lawyer Blog posted an article Reasons to Prepare a “Living Trust” where he has compiled a good list of reasons. They are:
* Avoiding probate. Since the property is no longer in your name as an individual, but is now in your name as trustee, there is no reason to go through probate. This is a savings of 5%-10% of your gross estate. An additional benefit is that it will only take weeks instead of years to transfer your property to your heirs.
* The trust will remain private. Unlike a will, which has to be filed as a public record in the probate court, the trust remains a private document even after your death.
* With certain provision in the trust, you can completely avoid or reduce estate taxes. This can mean savings of literally thousands of dollars.
* You avoid the potential of a guardianship hearing because you have already named someone to take your place if you are unable to handle your affairs. In addition, you can set up your trust to allow your family Doctor to make the decision of whether you can handle your own affairs. The alternative is to allow a judge to do this in a public hearing.
* If your heirs are too young or immature to handle the money you will leave them when you die, you can use a trust to determine when they will receive the money and how much they will receive each time. For example, you can leave instructions that say, when my child reaches 30, he gets 1/3 of the property. When he reaches 35, he gets another 2/3. And when he reaches 40, he would receive the final 1/3, or the remaining balance of the estate.
* The trust is less open to attack than a will. This means that your wishes have a better chance of being carried out.
* In the context of a second marriage, the trust is an excellent way to protect both the surviving spouse and the children from your previous marriage.
* If you have property in another state the trust will eliminate the probate in the other state.
* Transferring property through a trust allows your property to receive a stepped up basis. This could greatly reduce the amount of capital gains tax your heirs will pay.
* Setting your finances in order will give you peace of mind.