Regardless of your wealth, estate planning is crucial to making sure that your prized possessions and other assets are handled in the best way possible after you die (or should you become otherwise incapacitated). While not a necessary component to estate planning, many find that building what is known as a “living trust” is a great way to ensure their assets are secure both in life and death. There are in fact many benefits to having a living trust, but here’s what you need to know:
What is a Living Trust?
Unlike a standard will where you designated people who inherit your various assets and make certain requests for how things are to be handled, a living trust is more structured and often more secure. By working with an estate attorney / estate planner, you essentially create an outside entity (the trust) to which you turn over ownership of a designated set of assets. You then select a trustee (usually someone very experienced in these matters and/or someone close to you who can be fully trusted) to carry out your instructions of the trust. When the time is right, the trustee ensures that the trust’s assets go to your named heirs. One of the biggest benefits with living trusts is that it involves far fewer legal proceedings than a will does when it is carried out.
The Two Kinds of Living Trusts
There are actually two distinctive forms of living trusts, and it is important to understand what each entails. The first kind is called a “revocable” living trust, and this is where your trust can be altered or even taken back entirely at any point. The benefit of this type of trust is that it gives you a lot of freedom, especially should you foresee important changes in your future. However, the downside to a revocable living trust is that your estate planner will have a very difficult time keeping your taxes at a minimum (if they are able to at all).
The other kind of trust is an “irrevocable” living trust. As its name suggests, this type of trust cannot be altered or taken back once it has been established. While this may be an intimidating choice to some, the benefit to this trust is that estate planners are able to keep taxes at bay. This means that the heirs of your trust will either pay minimum taxes on their inherited assets or in many cases, none at all!
The Bottom Line
Remember, there’s no time like the present to start planning for your future (and subsequently the future of those you love). Contact our licensed estate attorneys today to learn more and start taking the first steps.