When is a Living Trust a good idea?
Certainly, a Living Trust is a valuable estate-planning tool for managing businesses, real estate, and high-valued assets/accounts.
But it’s not just for wealthy individuals.
Unlike a Last Will and Testament, a Living Trust avoids probate
(which can take months or even years). So it’s a helpful strategy for arranging a quick and private transfer of wealth
when you pass away.
If you have a sizable but straightforward estate, it’s easily possible (and smart) to write instructions for the management of your assets and property in a Living Trust.
Plus, you can name a trustee—someone to represent and enforce your intentions while you’re living and after you’re gone.
In essence, a Living Trust is a good idea when you want to
- Quickly transfer estate assets to your beneficiaries after you die
- Prevent people from using your assets against your wishes
- Benefit from tax exemptions
- Protect your privacy
Although we’ll cover the basics of Living Trusts, you can always consult a lawyer to learn more.
Revocable vs Irrevocable Living Trusts
Generally, there are two types of Living Trusts: revocable and irrevocable. The type that works best for you depends on your situation and what you want to do with your estate.
In any case, once you create a Living Trust, you become its grantor.
Revocable Living Trust
With a Revocable Living Trust
, you can appoint yourself as a trustee and change the terms of your trust at any point
in your lifetime.
That being said, you’ll need to be organized and diligent about updating a revocable trust as things change in your life. Or, you could always hire a professional to help.
Still, the flexibility of a Revocable Living Trust is beneficial when adapting your estate plan to life changes. You’ll also gain peace of mind having someone to manage the trust on your behalf, in case you ever become incapacitated.
Once you die, however, your successor trustee takes over and the terms of the trust become irrevocable.
Irrevocable Living Trust
As the name implies, you generally can’t change the terms of an irrevocable trust
once you enact it. As such, it’s crucial to have a trustee that’s honest, responsible, and capable
of executing your wishes.