Getting your affairs organized may seem like a daunting task. However, there are some tools and documents that can ease the estate planning process. While a last will and testament is an essential part of your plan, a living trust may be advantageous as well.
Contrary to what some may think, living trusts are not just for the rich and famous. Trusts can be beneficial to those looking for a more refined way to handle their affairs.
What is a trust?
A trust is an entity created to manage your property and assets both while you are alive and after you pass. You can set up the trust as either revocable or irrevocable, depending on your financial needs. A revocable trust allows you to access your property and assets throughout your life, adding and taking out items as you wish. An irrevocable trust, on the other hand, takes ownership of your property once you place it in the trust. For example, you would not have to pay taxes on property placed in an irrevocable trust, as you are no longer the property owner.
What are the benefits of a trust?
Although trusts are not beneficial for everyone, they may help your estate plan depending on the circumstances of your affairs. According to The Balance, some potential benefits of trusts include the following:
- Property can avoid the probate process
- Property may transfer directly to beneficiaries
- Matters are private, as trusts are not a matter of public record
- Beneficiaries may avoid conservatorship or guardianship of the estate
When you place your property and/or assets in a trust, you can also dictate how and when you would like them distributed to beneficiaries. For instance, you may add a restriction that a beneficiary only receives their inheritance once they graduate college, or that money is issued to help them pay for tuition. You can also pay out assets over time.
A living trust can help you customize your estate plans and ensure your beneficiaries are taken care of once you pass.