A living trust is a great way for avoiding probate. But do you actually need one? One of the more general questions concerning estate planning people encounter is if making a will is sufficient, or if it’s wiser to devise a living trust in order to avoid probate. As expected, the answer is, “That remains to be seen.” Many individuals need a living trust without delay, others are going to never need one, and a lot of us fall somewhere in between.
Avoiding Probate Using a Living Trust
First of all, living trusts help you in avoiding probate, but why is avoiding probate essential? Probate is the method in which an individual’s property is cataloged and distributed following their passing. A lot of people strive to avoid probate because it takes a long time and is costly. There is an increasing amount of ways to transfer assets to inheritors free from probate inside of weeks or, at best, months of passing. These comprise of making gifts prior to passing away, including a pay-on-death designation to a financial institution account, holding the home in joint tenancy with right of survivorship with your husband, wife, or partner, and appointing a beneficiary for retirement and life insurance accounts. But only a living trust can be used for all kinds of property, at the same time offering the broad planning adaptability of a will. Using a living trust, for instance, you can appoint alternative beneficiaries to inherit property should your initial beneficiary pass away before you do. That is something you cannot achieve with joint tenancy or a pay-on-death financial institution account.
Downsides to Living Trusts
Living trusts do have their downsides. In comparison to wills, living trusts are significantly more time-consuming to establish, entail more continual maintenance, and are more challenging to alter. A lawyer-devised trust usually costs more than a $1,000, though the cost is going to decrease drastically when you use a self-help device to create your own trust. Additionally, you are still going to need a straightforward will, as a back-up tool, even when you devise a trust.
Is a Living Trust Appropriate for You?
These downsides are outweighed by the benefits for those that have large estates and for those that are likely to pass away in the next 10 or so years. To see if you require a living trust, think about the following factors:
How Old Are You?
How Wealthy Are You?
Are You Married?
Source:
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Nolo. (2011, October 10). Why you may not need a living trust. www.nolo.com. Retrieved December 7, 2022, from https://www.nolo.com/legal-encyclopedia/living-trust-need-unnecessary-30260.html
