Living Trusts Offer Advantages Over Wills

Posted on Friday, February 3rd, 2012 at 11:50 am and filed under Advance Directives

As mentioned in the accompanying article about wills, provisions in other documents such as insurance policies, retirement accounts, and jointly-held property often conflict with the intent expressed in a will. Another drawback of wills is that they are subject to the probate process and its typical delays, public proceedings, lawyers’ fees and court costs, which will cost your heirs as it reduces their inheritance. Trusts, on the other hand, bypass the probate process and put you 100 percent in control of your assets.

A trust that has gained popularity for its effectiveness, according to the American Bar Association, is the revocable living trust, also known as an inter vivos trust.

The Advantages Of A Living Trust

• Requires no court proceedings, unlike wills. Titles to real estate, securities and other assets are placed in the trust during the owner’s lifetime, and the trust document contains the instructions for managing the assets and how they are to be distributed when you die. Through the trust, a successor trustee distributes the assets according to these instructions, and then dissolves the trust.
• Allows you to change or cancel the terms, change beneficiaries and move assets in and out at any time during your lifetime.
• Reduces exposure to legal challenges. When going through probate, the assets covered in a will are frozen for several months as the court provides the opportunity for anyone to contest the will. The person contesting the will can do so without a lawyer. In the case of a trust, the assets are not frozen and a person who wants to contest it usually must hire a lawyer and file a lawsuit. Without the usual delays of probate, the assets in a trust often are distributed and the trust dissolved before a contesting heir has time to act.
• Does not reduce income taxes, but living trusts can reduce the federal estate tax burden.
• Allows you to authorize a trustee to manage your property for your and your family’s benefit should you become mentally or physically disabled and unable to manage your affairs. This feature, not available with a will, avoids a court-appointed guardianship and helps assure greater control over your assets. The living trust gives you the freedom to designate the person who will take over your affairs if the need were to arise.

 

To help you determine whether a living trust is the right solution for your estate planning needs, consult with your attorney. For more information about estate planning, visit the American Bar Association’s Estate Planning FAQs. (link to: http://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning.html