Living trusts can be quite confusing to the average consumer. First, creating a living trust occurs while a person is still alive. Within the living trust, assets are gathered and transferred from an owner’s name into the name of the trustee assigned to the living trust. The property within the trust is owned by the trustee so the efficient distribution of said property occurs after a person’s death.
The major benefit of a living trust is the elimination of a long probate process. This lengthy, expensive process inventories and distributes assets after death. Within a living trust, distributions after death occur much faster. Granted several options exist to transfer assets to surviving family. However, only a living trust is flexible enough for all types of property and offers broader planning.
Granted living trusts, in comparison to wills are more time-consuming, require ongoing maintenance, and lack quick modifying flexibility. However, below explains when a living trust is ideal.
- Type of property – business ownership, for example, is a situation where a lengthy probate period could dramatically impact the success of the business.
- Age – a living trust does little during a person’s lifetime. Remember, the owner is transferring all asset into the trustee’s name. At a younger age, people are less concerned about probate. In addition, the probate laws can change within the person’s life expectancy. Therefore, at a younger age, a will makes more sense.
- Estate size – wealth also determines the necessity of a living will. A larger estate with a living will save more for benefactors. Basically, the benefactor can retain more funds by avoiding a long probate.
Basically, living trusts offer benefits when a person has a lot of assets and prefers to avoid a long, expense probate process. If you’d like to explore a living trust option, please contact us.