When it comes time for estate planning, you’ll need to decide which tools are best for you and your family. Living trusts have gained some popularity, but many Americans are still unclear about what a living trust is and how it can be beneficial for their estate plan. Let’s take a look at the many advantages a living trust has to offer.
What is a living trust?
A living trust, or revocable trust, is a legal document through which assets are held by a trustee for the benefit of the grantor during his or her lifetime, and then transferred to designated beneficiaries at the time of the grantor’s death. The terms of a living trust can be altered at any time or revoked entirely. If the grantor also serves as the initial trustee (as is typically the case), a successor trustee must be appointed to assume control of the trust after the grantor/trustee dies or becomes incapacitated. It is the successor trustee’s job to ensure that assets and property are distributed to beneficiaries according to the trust agreement.
What are the benefits of a living trust?
Perhaps one of the most attractive features of a living trust is the avoidance of probate, which is the legal process of distributing a deceased person’s estate under court supervision. With a living trust, the grantor’s assets are distributed as provided in the trust agreement, avoiding the probate process altogether. Otherwise, heirs can expect to wait months or even years for their inheritance during sometimes lengthy and costly probate proceedings.
A living trust is a complex legal document that may cost more to draft and create than a will. A living trust also requires the grantor to transfer ownership of his or her assets and property to the trustee. But while the initial costs may be higher than that of a will, a living trust is likely to save your estate more money in the long run by avoiding the probate process.
Another benefit of avoiding probate is privacy. Unlike a will, a living trust is a private document that does not become part of a court record, meaning that the details surrounding the distribution of the decedent’s assets are not available to the public. This is especially appealing to families of high net worth who wish to keep these matters private.
A living trust can also avoid the need for a court-appointed conservatorship in the event that a grantor/trustee becomes incapacitated. Instead, the successor trustee steps in to manage the grantor’s affairs and daily care. Because a living trust is revocable, the grantor/trustee can dispute an implication that he or she is incapacitated and remain in control of the trust.
Unfortunately, it’s common for disputes to arise between a trustee (or successor trustee) and a beneficiary. Our legal team has years of experience in handling complex trust disputes. For expert guidance and professional discretion, contact our attorneys for a consultation.
