Estate planning is a harrowing but critical task, one of which everyone can benefit from. However, everyone’s estate planning needs are going to differ based on a number of variables. Creating a will is a universal necessity, but a revocable living trust can be more beneficial to some than others.
What is a revocable living trust?
A revocable living trust is a legal document that allows you control over how your property is managed during your life as well as after your death. The term “revocable” means it can be revoked, updated or canceled at any time as long as you’re mentally capable. The trust becomes irrevocable upon your death and cannot be modified.
Are there downsides to a living trust?
There are numerous benefits to living trusts, but they also have their downsides. In comparison to writing a will, establishing a living trust is a little more complicated. They are considerably more time-consuming, require ongoing maintenance and can be a little more costly.
How do you know if a revocable living trust is right for you?
If you have a larger estate, own a business, have property in another state or deal with ongoing health issues, it’s in your best interest to consider a revocable living trust. Keeping an updated living trust can make the probate process much less stressful for your loved ones, and in most cases, allow them to avoid it altogether.
Other benefits of having a revocable living trust include:
- Protecting your privacy. Unlike a will, a living trust does not get filed with the court and does not become a matter of public record.
- Avoiding probate. As mentioned above, having an up-to-date living trust often allows your loved ones to avoid the probate process. A trust is no longer part of your estate once the legal title has been transferred to the beneficiary. Since the title has already been transferred, there’s no need for probate. However, a will is subject to probate – be aware of this if a will is also included in your estate plans.
- Providing care if you’re unable to care for yourself. When setting up your living trust it is important to appoint an alternate trustee. In the event that you’re no longer able to care for yourself, your trustee will have the authority to act on your behalf and carry out your wishes as listed in the trust. By assigning a trustee, you avoid the hassle of court-ordered guardianship and conservatorship.
- Giving you greater control. When you have a living trust in place, you not only dictate who you’re leaving assets to but how those assets will be dispersed. If you’re planning to leave assets to a loved one who doesn’t manage money well and are concerned over what might happen if they get everything at once, a living trust allows you to set up a payment schedule.
- Holding property owned in other states. If you own property in more than one state and do not have a living trust, your loved ones will be subjected to probate in each of those states. Include all owned property in your living trust to help your loved ones avoid out-of-state probate.