When planning your estate, there are a myriad of factors to include in your last will and testament. This includes a complete list of your property and assets, as well as who you would like to have your property once you pass.
Yet, some suggest that leaving a living trust may be the best way to transfer property and assets to friends and loved ones. While there are many benefits to creating a living trust, it is important to know what they are and how they work to ensure it is the right option for your estate plan.
What are living trusts?
According to Forbes, living trusts are enforceable documents that you create while you are alive. You can revise and update revocable trusts anytime throughout your life. However, irrevocable trusts are essentially set in stone once you sign the final document.
If you leave property to friends and family in your last will and testament, the items may be forced through the probate process before they finally get to beneficiaries. Trusts, on the other hand, transfer directly to beneficiaries and bypass the probate process altogether.
How are trusts beneficial?
Living trusts offer several advantages when compared to other ways of property transferal. For instance, trusts:
- Protect money transferred to minor children by storing it in an account until they reach a certain age
- Reduce or eliminate estate taxes
- Ensure the property and assets get directly to the beneficiary and do not end up with someone outside the family
- Keep records private, while wills are available to the public
You can create and customize the terms of your trust. For example, if your child is terrible with money, you can specify that the trust have control of the funds and distribute money to the child under certain discretion.
