What Are the Benefits of a Living Trust?
Estate planning can be confusing and difficult to manage, because there are so many different ways you can set up your assets for future distribution to your heirs and beneficiaries.
But the two most common types of estate planning are wills and trusts, which each have specific advantages and drawbacks.
Over the past few decades, living trusts have gained popularity because they provide you with more flexibility in how and when you divide your assets to your loved ones.
We think it’s important for you to understand the benefits of a living trust, so that you can make an informed decision about whether it works for your situation.
What Is a Living Trust?
A living trust works like a will in that it’s a legal document that details how you want your assets distributed.
But the major difference between a living trust and a will is that a living trust goes into effect immediately, whereas a will only becomes valid after your death. That means that you can begin distributing assets while you’re still alive, which gives you control over how and when your beneficiaries use those assets.
With a living trust, you name a trustee that is responsible for carrying out the instructions in the trust when you die or when you are rendered mentally or physically unable to make sound decisions.
The two most common types of living trusts are:
- Revocable – This refers to transferring your assets to a trust that you control. You can alter or revoke the trust whenever you want, however, in the event of your death, the trust assets will pass to your beneficiaries without having to go through probate.
- Irrevocable – This refers to a trust that lets you distribute some or all of your assets while you’re alive. If you distribute all the assets in the trust, the government cannot not include them as part of your estate, which means your heirs would avoid all estate taxes. This trust is usually reserved for people who have significant wealth. Irrevocable trusts cannot be revoked.
Providing You With Business Law Services
Securing your family’s future is one of the most important things you can do, and making sure you’ve chosen the proper estate planning strategy is the key to that security. Most people aren’t aware of the differences between a will and a trust, and the benefits each provides. That’s why it’s important for you to hire a lawyer with the experience to help you choose the right estate planning strategy. Elissa I. Henry Law Firm, PLLC can help you understand how a living trust will work, then put the trust together so that you can begin enjoying all of its benefits. Our job is to make you feel comfortable before you make a decision that will affect your family’s future.