I cover how you benefit from a living trust in my popular book “Complete Guide To Trusts And Estate Planning’. If you don’t have a copy you can download it for free.
When you create a revocable living trust you transfer ownership of all your assets to the trust. It’s a document that empowers you, as the trustee(s), unlimited access to and full control of your assets during your lifetime. It also enables you to pass property to family, friends, and others after your death. A trust also enables you to appoint someone to make certain your property goes to the loved ones you choose.
Bottom line, a trust is a perfect way to leave cash to your heirs and GUARANTEE they don’t squander your legacy.
Let’s take a quick look at some of the major benefits you get from having a trust:
Benefit #1: Protecting Property for Certain Beneficiaries – You can leave property not only for a husband or wife yet also to protect those beneficiaries who couldn’t handle the inheritance, such as minor children. Many states don’t allow minors to own property and assign them a legal guardian. A trust ensures that YOUR beneficiaries receive your property and no one else.
Benefit #2: Reducing or Eliminating Estate Taxes – You can use living trusts to take advantage of certain deductions and credits that are allowed under the tax laws.
Benefit #3: Managing Property upon Incapacity – A revocable living trust allows your successor trustee to take over whenever you resign or become incapacitated. This includes checking accounts, savings accounts, paying bills, health matters, etc. and ensuring that no unauthorized people walk off with your money! There’s generally no interruption in the management of your property, and no court supervision. These matters are handled by someone YOU choose and not the courts or attorneys. Revocable living trusts also enjoy a greater level of acceptance throughout the legal and financial community, and almost all states provide a broad range of statutory powers regarding the management of trust property.
Benefit #4: Avoiding Probate – Your property in your revocable living trust will not go through probate legal proceedings when you die. That’s because the trust instrument spells out who actually get’s the property. This helps to preserve your estate and eliminates a lot of unnecessary emotional pain and stress for probate legal proceedings.
Benefit #5: Avoiding a Will Contest – A will is much more likely to be contested than a revocable living trust. Primarily because a will goes into effect only after a person dies, while a revocable living trust goes into effect as soon as your trust is signed and lasts for some time after you pass away.
So when someone contests a will, they have to prove that the testator was either incompetent or under undue influence at the precise moment the will was signed. Yet to contest a revocable living trust, they have to prove that the grantor (you) was incompetent or under undue influence not only when the trust was signed, but also when each property was transferred to the trust, when each investment decision was made, and when each and every distribution was made to the owner or anyone else, etc. And this is virtually impossible to do.
Benefit #6: Privacy – If you value your privacy, then nothing is better that a revocable living trust. They don’t get filed with the probate court, and no one gets to look at them unless the grantor (you) or the trustee allows it. Unlike with a will and going through probate which is a PUBLIC process. Anyone can read your will, they can find out who the relatives and beneficiaries are, they can look at the claims of creditors and the list of assets, and they can find the phone numbers and addresses of estate beneficiaries. Some pushy sales people often go through estate files to locate grieving heirs to prey on. Also, disgruntled heirs, even friends and neighbors, often like to poke their noses into an estate file to see what’s there. And, all they have to do is go online to access the information. Your trust solves this permanently!
One important reminder, it’s important to make sure your goals on still on target. So it’s necessary to review your financial plan at least once per year and your estate plan at least every other year. your trust, in particular needs to be reviewed because the number 1 reason a trust has issues is because the Trustors (you) fail to keep it “funded” (keeping assets in the name of the trust).
These are just a few of the benefits you get from having your own trust. There are many more as well that vary based on your unique needs and situation. I help my clients get the most benefits and advantages possible for their trust and estate plan. My expertise comes from the benefit of lessons that can only be learned by helping thousands of people set up their trust and estate plans.
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