Do You Really Need a Living Trust?
There’s been more and more talk about living trusts these days, encouraging everyone to establish one so probate can be avoided when they die. Is it necessary for all people, though? What, exactly, is a living trust? What if you have a very small estate? What if you are still less than 50 years old? You need to understand these and other factors clearly before you decide whether a living trust is right for you.
A Living Trust Is…
A living trust is a legal document that is much like a will, but it becomes effective while you are still living. When you make a living trust, you place all your assets into the trust. It is used for your benefit while you are living and then transferred to your beneficiaries after your death. The trust also names those persons or organizations who will receive your assets.
A trustee manages the trust’s assets. It is common for people to name themselves as the trustee so they retain control of their assets. Usually, a successor trustee is also named in case you ever become incapacitated or simply decide that you no longer want to deal with the duties. It is wise to make the trust revocable, or changeable. That way, if your circumstances change, you can alter the terms of the trust.
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Should Everyone Have a Living Trust?
A living trust is not the best choice for everyone. Young people who do not have children or very many assets will not really reap any benefit from a living trust. Other people with small estates often choose against creating a living trust as well. Still others would prefer the courts, rather than a trustee, supervise their estate. The rule of thumb is that the larger the estate, the more beneficial a living trust would be.
So who will benefit the most from having a living trust?
Parents often decide to create a living trust so their beneficiaries’ assets are protected. Not just parents of minor children, but parents who feel their adult children are not responsible enough to handle a large sum, parents who want to protect the assets from a child’s unscrupulous spouse or parents of adult children who are incapacitated. They feel this is the best way to make sure their child reaps the benefit of their assets for as long as possible.
Another group who often choose to create a living trust is those who worry about becoming incapacitated. As the average age of life expectancy continues to rise, more people are concerned that they will become vulnerable to scam artists, or that their own mind will begin to play tricks on them and they will forget to pay bills or make unwise financial decisions. By creating a living trust and naming a capable successor trustee, many of those worries are unnecessary.
If you would prefer to avoid probate, or if you want your affairs kept more private, you are also a good candidate for a living trust. If you feel a living trust would be the right choice for you, find an attorney who specializes in this type of law and talk to him/her. They will advise you if a living trust is a good option for your personal situation.