The purpose of this article is purely educational and does not provide legal counsel. Kindly seek professional advice from a lawyer regarding your specific circumstances.
Over the coming two decades, Americans stand to inherit a staggering $72 trillion in assets. Regardless of whether your estate is substantial or modest, you might be keen on transferring your wealth to your family members as efficiently as possible.
To that end, you have options. You could write a will that dictates where you want your assets to go. Or, you could work with an attorney to set up a living trust.
A living trust is a legal arrangement you can set up whilst still alive, and maintain control over throughout your life. This trust can manage assets which will be transferred to your beneficiaries after your death.
A living trust might be something worth considering during your planning process. estate planning , but it's not for everyone. So it's important to consider the pros and cons carefully.
The upside of setting up a living trust
One big benefit of a living trust is that you're not relinquishing control of any assets. If you place assets into that trust but change your mind, you can undo that decision. You can also make changes to your trust's beneficiaries as you see fit.
One significant advantage of having a living trust might be that it assists your beneficiaries in sidestepping the probate procedure after your death. The probate process involves legally verifying the legitimacy of a will, which can drag on for quite some time, potentially delaying your intended recipients from obtaining their inheritance indefinitely.
It’s important to understand that when wills undergo probate, they turn into publicly accessible records—much like your curious next-door neighbors might potentially access your mortgage papers and learn about the amount you borrowed for your house. Should maintaining privacy be a priority for you, particularly so that you can safeguard the confidentiality of your family members after your demise, establishing a living trust may serve as an effective strategy toward this end.
So why wouldn't Interested in setting up a living trust?
The primary objection to using a living trust revolves around cost and complexity; establishing one typically requires greater financial investment and legal intricacy compared to drafting a standard will. Although employing a lawyer for writing a will is often recommended, it’s not mandatory. Various software tools can assist in setting up a simple will with relative ease.
But good luck putting a living trust in place without help. Even though you may technically be able to do it on your own, you're likely to struggle without the right legal background. You'll need to decide if the higher cost of a trust is worth it.
If you believe that a living trust might function as some kind of tax shield for your family, reconsider. Assets placed in such a trust can still be subjected to estate taxes when the situation arises for your relatives, regardless of what those taxes amount to at that time.
Discuss your finances with a financial advisor.
Consulting an estate planning lawyer about whether you need a living trust could be similar to asking an HVAC company if you should install a new air conditioner. You might not actually require one, but they might advise you to get one just to secure your business.
Before consulting an attorney about establishing a living trust, consider discussing it first with a financial advisor. As this person typically wouldn’t handle the actual setup of the trust, they might offer you a more impartial viewpoint.
Certainly, if you already have a trusted estate planning lawyer, it’s wise to consult them too. If you choose to proceed with a living trust, ensure you select an attorney who has strong recommendations to facilitate the creation of your trust as effortlessly as possible.
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