When shaping your estate plan, two primary tools often come into play: a will and a living trust.
While both of these can ensure your assets get distributed according to your wishes, the living trust offers some compelling advantages that make it an excellent choice as the centerpiece of your estate plan. Let’s delve into the benefits that set living trusts apart.
The most notable benefit of a living trust lies in its ability to avoid probate. Probate is the legal process of validating a will, identifying and inventorying the deceased’s property, paying debts and taxes, and finally, distributing the remaining assets.
This process can be time-consuming, often taking several months to years to conclude. Moreover, probate can be expensive, sometimes consuming up to 5% of your estate’s value in legal fees and court costs.
In contrast, a living trust doesn’t require probate. Upon your demise, the assets held in the trust are immediately transferred to the beneficiaries according to your instructions, bypassing the lengthy and costly probate process. This benefit alone makes a living trust an attractive alternative to a will.
Now, let’s discuss privacy, another significant advantage of a living trust. Probate proceedings are public, meaning anyone can access information about your assets, their distribution, and even your debts. If you value your privacy, this public exposure may be undesirable. On the other hand, a living trust operates privately, keeping your financial affairs away from prying eyes.
Moving on, a living trust provides better provisions for incapacity. While a will only becomes effective after your death, a living trust covers you during your lifetime.
If you become mentally or physically incapacitated, a successor trustee whom you’ve appointed can step in and manage your affairs. This feature ensures continuous management of your assets, thus avoiding court-supervised conservatorship or guardianship.
Another noteworthy benefit of a living trust is its flexibility. You can amend, modify, or revoke a living trust at any point during your lifetime, as long as you’re mentally competent. This flexibility allows you to adapt the trust in response to changes in your life circumstances or financial situation.
Avoid Ancillary Probate
Furthermore, a living trust is beneficial for property located in different states. If you own out-of-state properties, these assets will need to go through ancillary probate in their respective states if you only have a will. However, if these properties are included in your living trust, you can avoid this multiple probate situation, known as ancillary probate, saving your beneficiaries from additional legal procedures and costs.
Mitigate Challenge Possibilities
The final point we will look at is the reduced likelihood of challenges with a living trust with a no-contest clause. Wills can be contested during probate, which can lead to bitter family disputes and further delay the distribution of your assets. Since living trusts are not made public, and due to their complexity, they are harder to challenge, ensuring smoother transition of your estate.
Summing It Up
In summary, a living trust provides a range of benefits that make it an excellent centerpiece for your estate plan. It bypasses the time-consuming and costly probate process, ensures privacy, provides provisions for incapacity, offers flexibility, eliminates the need for ancillary probate, and reduces the risk of legal challenges.
Put a Plan in Place!
Today is the day for action if you are going through life without an estate plan. A living trust may be the right choice for you, but when you work with us, we will make recommendations based on the circumstances. We can help you learn the advantages of a living trust so you can make the appropriate decisions for your family.
At the end of the process, you will emerge with a rock-solid plan that will bring your wishes to fruition after you are gone. If you would like to get started, you can call us at 888-222-1328 to schedule a consultation at our Phoenix, AZ estate planning office. There is also a contact form on this site you can use to send us a message.