In addition to avoiding probate, establishing a living trust provides other advantages such as privacy protection and flexibility.
1. Avoidance of probate
As noted, when a person dies, their heirs must go through the legal procedure of transferring their assets. As a result, a multi-step process or processes must be followed if you have assets or property in multiple states. Probate costs can be avoided by setting up a living trust, which expedites the transfer of assets to the beneficiaries.
2. Flexible and Modifiable
The revocable living trust gives you the freedom to make changes to the trust agreement at any time while you are still living.
3. Respect for Individual Privacy
Revocable trusts are a wonderful option for persons who are concerned about the privacy of their financial records and assets after their death. If your will is subjected to the probate process, all of the documents that are filed into it become public record, which anybody can see.
4. Resolve all issues affecting the estate
There may be family disagreements after your death if you leave a basic will in place. You can directly disinherit anyone who challenges your last desires after your death if you use a living trust.
5. Asset classification
People who have substantial separate property that they purchased before getting married will find this to be helpful. These assets can be kept apart from the joint property assets of the couple with the help of the trust.
6. Inheritance/Guardianship via Durable Power of Attorney
The establishment of a living trust can assist you to control the spending habits of a guardian for your minor children’s benefit. A power of attorney allows you to appoint another person to act on your behalf in the event that you become unable to do so yourself or you die.
7. Wealth management tool
Employing the services of a competent trustee to look after your assets ensures that the money you’ve saved can be passed down for many generations. With specific emergency provisions, you can set a limit on the number of withdrawals from your account.
The Living Trust’s Drawbacks
A revocable living trust has numerous advantages, but it also has certain disadvantages:
1. Updating Trust records
A yearly review and any necessary modifications are often required for the majority of people (trusts do not adapt automatically to changed circumstances, such as divorce or the birth of a child). You should also take into account the additional hassle of ensuring that future assets are registered to the trust and allowing other professionals to assess trustee powers and responsibilities.
2. Expenses Associated With Administration
If you use a bank or trust business as the trustee, you will have to pay additional costs for investment advice and trustee fees.
3. There will be no tax credit
A revocable trust will not save you money in taxes. The trust’s assets will continue to be taxed and subject to creditors and legal action, even if they are held in a trust.
Living Trust FAQs
1. When it comes to a living trust, is it possible to oppose it?
It is often possible for your successor trustee to transfer your trust’s assets without going to court. However, to resolve issues such as whether the underlying legal documents were defective or if someone claims the grantor lacked mental capacity at the time of signing the Declaration of Trust, court processes may still be necessary.
2. What information about a person’s estate is available to the public?
For the most part, the provisions of a living trust and the assets held by the trust are kept private. The trust’s details may however be made public if the trust is challenged in court.
3. Does the law in every state allow the use of living trusts?
Yes, you can set up a living trust in all 50 states.
4. Is a living trust’s property susceptible to probate?
No, and this is one of the most important reasons to set up an estate plan with a living trust. The assets you’ve placed in a living trust will not be subject to probate. Instead, your successor trustee will distribute the property in accordance with the rules of the trust.
5. Does a living trust subject you to estate taxes?
Yes, for the purposes of estate tax, any assets you place in your trust are considered to be part of your estate. Only the wealthiest Americans are affected by estate taxes; a select few. Consult a knowledgeable attorney if you feel your assets are susceptible to estate taxes.
6. What are the benefits of a trust?
Being able to put your confidence in a living trust provides a sense of security. Do not be among the many people who wait until it’s too late to organize their estates.
Schedule Your Initial Consultation Today
Understandably, there are a variety of reasons why people avoid estate planning, such as the belief that it is solely for the wealthy, or a simple fear of death. In fact, everyone has an estate and setting up a living trust is rather inexpensive. Additionally, estate planning is not entirely about dying. A living trust allows you to decide what happens to your property while you are alive as well as after your death. Thus, for those who want to speed up the process of distributing their assets, a revocable living trust is a good option.
We can help you set up a Texas living trust as soon as possible. Schedule an initial consultation today and we will start the process.