Probate can have the reputation of being a nightmare, and many hate the idea of going through this process. If the idea of transferring your assets through probate daunts you, then you will be happy to know that living trusts can avoid probate. The probate process is usually more expensive and time consuming than having a living trust set up to transfer assets. Moreover, a living trust has many more advantages than skipping probate. An estate-planning attorney can discuss with you the specific advantages that a living trust will bring to your estate plan and can assist you with setting up one to effectively address your needs and the needs of your beneficiaries. Meanwhile, here are 6 general benefits of using a living trust in your estate plan.
BENEFIT #1: A living trust can protect the assets in the trust for certain beneficiaries.
Sometimes, the intended beneficiaries are not capable to handle their full inheritance. For example, many states do not allow minors to own property. And even if a child was old enough to receive property legally, a full inheritance can detriment the child by tempting him to quit school or start an early retirement. Moreover, there are those beneficiaries who will spend all their inheritance at their first opportunity. A living trust can prevent any of these scenarios by allowing you to appoint a trustee to keep your assets for the benefit of your beneficiaries. The trustee would invest the assets in your trust for your beneficiaries’ benefit until they are capable of handling their inheritance.
BENEFIT #2: A living trust can reduce and even eliminate estate taxes.
Even though there are no provisions in the federal tax code that exempt living trusts from estate taxes, living trusts are often used by people and families to take advantage of certain deductions and credits that are allowed under tax laws.
BENEFIT #3: A living trust can help manage your assets upon incapacity.
If you become incapacitated without having done some prior estate planning, then your loved ones may have to file an application with the probate court to have a guardian appointed to manage your property. This can be a wrenching experience because your assets and affairs will have to be prepared before total strangers. A living trust allows a successor trustee to take over the management of your assets if you ever become incapacitated.
BENEFIT #4: A living trust can avoid probate.
The assets in your living trust will not go through probate when you die. However, your outstanding debts and taxes will have to be paid. The reality is that avoiding probate might not be a viable option for some individuals. Discuss the factors of your case with an estate-planning attorney to find out whether or not skipping probate is a viable option in your case.
BENEFIT #5: A living trust can avoid a Will contest.
A Will is more likely to be contested than a living trust. This is so because a Will goes into effect when the person dies, whereas a living trust goes into effect as soon as the trust instrument is signed and usually lasts sometime after the grantor’s death. To challenge a Will, an interested party needs only to show that the testator was either incompetent or under undue influence when he or she signed the Will. To challenge a living trust, on the other hand, an interested party may have to show that the grantor was incompetent or under undue influence when the trust was signed, when each asset was transferred to the trust, when each investment decision was made, and when each distribution was made to the owner or to anyone else. This is much harder to do than challenging a Will.
BENEFIT #6: A living trust can offer you privacy.
Probate is a public process. Therefore, theoretically, anyone can go into the probate court and look at a specific decedent’s estate file. Unscrupulous sales persons often go through estate files to locate grieving heirs to prey on. A living trust can prevent this because it is private, does not get filed with the probate court, and no one gets to look at it unless the grantor or trustee allows it.
Contact an estate-planning attorney to assist you with setting up a living trust today. For an estate-planning attorney in Florida, call the Law Office of David M. Goldman PLLC at (904) 685 – 1200 or click the “Contact Us” tab at the top of the page.