Having a proper estate plan in place is crucial for the preservation of wealth and assets. Most people believe a properly executed will is all someone needs to achieve this goal, but there are many other tools available as well.
A few disadvantages of a will are that they must pass through probate - the process by which a will is proven valid. However, with the help of a qualified estate planning attorney, people can bypass these drawbacks by placing their property and other assets in a living trust.
What Is a Living Trust?
A living trust is a legal document to which an individual grants title to some of their property. However, a common misconception is that once the property passes over to the trust an owner will no longer have control over it. This is incorrect. During the individual's lifetime he or she has total control over all the assets. A living trust allows its creator to provide detailed instructions for how the property is distributed upon death.
To ensure the creator's wishes are followed, each trust is administered by a trustee. A trustee cares for the trust and has a duty to abide by the instructions in the trust document.
Other Advantages of a Living Trust
Living trust are not for everyone, but an experienced estate planning attorney can advise each person as to whether a living trust makes sense for their situation. Once completed, a living trust provides its creator with the following benefits:
· Peace of mind with knowing assets are protected and will be used according to an owners wishes
· Choice between immediately transferring assets to beneficiaries at death or portioning the transfer over time
· Avoid probate, potentially in multiple jurisdictions if property is owned in more than one state, as well as the privacy of avoiding a public court proceeding
· Revocable living trusts can be changed during its creator's lifetime
It is also important to consider the disadvantages of living trusts. The AARP notes that trusts can be challenged by heirs much like a will and often trusts can be poorly drafted when, for example, someone follows an online template.
As a result it is very important for people to openly discuss their financial situation and their wishes with an experienced estate planning attorney to ensure their living trust is valid and properly drafted.
