You must have worked hard to reach where you are today, and it’s only natural that you want to pass on your assets to your children and loved ones.
Therefore, it is necessary to make plans for your estate. If you don’t make a plan, your hard-earned money will end up going to the government in the form of probate fees. So the ideal way to protect and distribute your assets entails drawing up a living trust.
What’s a living trust? And do I need one?
A living trust is a legal document that helps individuals place their assets into a trust while they are alive. Even though these assets are owned in the name of a trust, they can still be used. So a living trust offers flexibility in the control over funds passed to heirs than a will does.
A trustee is appointed to protect and manage the assets in the trust in case you become incapacitated or a young beneficiary is involved. After the person passes away, the trust offers a clear direction on how one’s assets should be distributed and who the beneficiaries are.
In this way, your living trust allows you to maintain greater control over your assets in your life as well as after you die.
People often create a living trust to avoid probate, which can last years and cost up to 10-to-15% of an estate’s value. To avoid going into probate, consult your attorney to draft a trust litigation agreement for you in your lifetime.
However, if you don’t have the services of an attorney at your disposal, then you can hire an attorney to draft the agreement for you.
There are many ways to find a reputed attorney. For instance, you can search “trust litigation attorneys near me” on Google. The results will give you a list of all the attorneys in your area. You can hire one of them to get trust litigation for your estate.
Moreover, you can ask your friends and family for referrals. You can also visit the director of your state or the local chamber of commerce to find an attorney.
Now that you comprehend the importance of a living trust, here are some questions you should ask while creating the trust.
#1. What assets can be mentioned in a living trust?
Most of your assets can be placed into your living trusts, such as real estate, jewelry, family heirlooms, cars, securities, savings or retirement plans, etc.
Be sure to have the ownership documents at hand to prove the title of each asset. If you own several properties, you should classify them by their value. Place higher value property in the living trust first.
#2. Who can be a trustee?
You can name yourself as a trustee. It permits you to manage the trust during your lifetime. However, you will have to select a successor trustee so that someone will be able to handle the trust if you become incapacitated and cannot manage it yourself or if you pass away.
#3. Will I still require a power of attorney?
A living trust allows you to place all your assets into a trust. But a trustee and a successor trustee are assigned so that if you become incapacitated, there is someone who will manage the assets.
However, many attorneys recommend that a power of attorney be drawn up so that someone is legally authorized to make decisions on your behalf.
#4. Will I be able to avoid estate and probate taxes?
The state or the federal government sets estate taxes. A revocable trust is a trust that can be altered during an individual’s lifetime. You cannot avoid estate taxes on this one. However, an AB trust can help you bypass estate taxes because assets are passed directly from one spouse to another.
Moreover, since living trusts do not pass through probate, there won’t be any fees or costs incurred. So depending upon the living trust, you can easily sidestep estate and probate taxes.
#5. How will living trust protect my children’s future?
As parents, we aspire to provide for our children during our lifetime as well as when we pass away, especially if they are minors. Naming them as beneficiaries and assigning someone as a guardian is the easiest way to continue to provide for them even after you are gone.
There are several factors to consider when establishing a trust for your children. For instance, a revocable living trust ensures that funds are held in trust until a child is mature enough to manage the funds.
Moreover, the time to distribute the assets and how much to give to your children can also be determined. It is especially beneficial when children with special needs are involved. They cannot manage their finances and require a substantial amount of money for care, assistance, and medical expenses.
#6. Do I still need to draw up a will?
It’s advisable to have a will even if you have a living trust. That’s because a living trust only covers the assets you transfer into the trust. You won’t be able to transfer everything.
More importantly, a will allows you to name a guardian for your children so that someone will look after them and your assets if you die before they reach adulthood.
Though we have covered the most important questions that you may have regarding the trust litigation process, these are by no means the only ones. It is better to consult a local trust litigation attorney to guide you through the process.
But as an essential part of your estate plan, a living trust offers a great deal of flexibility and privacy. It’s best to take the right steps today to ensure your family is taken care of, and your legacy survives even after you’ve passed away.