One reason to consider using a living trust is probate avoidance. This document is an estate planning vehicle designed to make it easier for your loved ones to administer your estate when you die. When you transfer title to your assets into your living trust, those assets should not need to go through probate court administration after your death. Instead, your designated trustee manages and distributes trust assets according to the terms of your trust without the time, expense, or hassle that can come with a court proceeding.
This estate planning tool can also make it easier for someone to manage your assets if you become incapacitated during your lifetime. When the trust holds title to your assets, your designated trustee can manage those assets on your behalf without obtaining a conservatorship over your affairs.
If your assets could potentially be subject to state or federal estate taxes when you die, a this type of trust may also help you take advantage of estate tax strategies designed to maximize the assets your loved ones or charitable beneficiaries inherit.
If you are considering a living trust, know that the process involves more than simply creating a legal document. In order for it to function effectively, you need to fund your trust by transferring assets to it during your lifetime, through beneficiary designation changes, or both. If you do not fund the trust properly, it may not work the way you want it to, and your assets could still be subject to a probate proceeding.
Potential Advantages and Disadvantages of Wills
Wills are generally less expensive to create than living trusts. When an estate goes through probate, however, administration expenses might exceed the cost of creating a trust. Whether your estate is subject to probate depends on your state’s laws. Some states require probate proceedings for every Will. In other jurisdictions, small estates do not trigger probate proceedings, regardless of whether the deceased person left a will. Because of this, wills can sometimes be more cost-effective estate planning solutions.
However, there is another consideration related to probate administration. When a will goes through probate in your state’s court system, it is a public proceeding. This means that anyone can read the details of the court filings and learn about estate assets as well as view the will itself. Living trusts offer a level of privacy wills cannot guarantee. The details of the trust agreement and the underlying assets inside the trust are not typically subject to public inspection when the person who created the trust dies.
There is not a one-size-fits-all solution for estate planning documents. The right choice for your estate depends on a number of factors, including the size and type of assets you own, your wishes for distribution, your state’s laws, and your goals for your estate. You may wish to consult with an estate planning attorney in your state to help you determine which documents best meet your needs.
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
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