As we get older, it’s important to think about our financial security. We want to make sure that we have the ability to survive and hopefully thrive in our old age. But what about beyond old age? Yes, I’m talking about securing finances after we have passed. The intent is to make sure that future generations can be taken care of, and our hard-earned money can put toward it’s intended use.
To that end, a living trust is worth considering.
A living trust is legal document that offers a benefit of allowing you to effectively transfer wealth to your heirs. It’s an agreement that gives you the opportunity to move your assets to a trust. The trust itself is administered by a trustee on behalf of individuals who have been specifically designated as beneficiaries by you, though during your lifetime you can act as the trustee.
So, why would anybody have a living trust? Here are 5 benefits:
- Probate. Probate is the process where a court determines the validity of a will. It can be a process that takes a long time, and has the potential to generate significant fees. With a living trust, that specific process doesn’t occur. Avoiding probate means you might avoid such issues.
- Privacy. These are private documents, and are not a matter of public record. If privacy of high importance to you, a living trust can provide you with more from that standpoint.
- Simplicity. A living trust can help to simplify your finances for your heirs. The trustee can manage the estate according to your wishes, and help your family manage the responsibility of dealing with a complicated estate.
- Control. A trust gives you more flexibility in how your assets will be distributed. For example, instead of having a beneficiary receive an inheritance in a lump sum, he or she could receive installments of it at different age milestones
- Taxes. A living trust could potentially be structured in such a way that estate tax liabilities could be minimized
Of course, I recommend consulting a professional financial planner and/or tax advisor first, before making any decisions. That said, it’s good to consider alternatives for managing assets and transferring wealth, and a living trust is an option to keep in mind.
Do you have any additional benefits of living trusts that you can share? Any drawbacks?