Have you been giving some serious thought to your estate planning? Sooner or later, death takes us all and it’s important to have a plan. Just like building a retirement plan, estate planning is about looking into the future and predicting what will be needed. In case the unthinkable happens, you want your assets prepared to provide for your loved ones, for special items to get to the right people, and for your finances to wrap themselves up neatly.
For most people, a simple will is sufficient to organize their final affairs. A will is a sturdy legal document that is capable of covering all your bases, from who gets the house to who should care for your pets. You can leave assets to charity, distribute items amongst your children, and leave instructions on how to close out of your remaining business. However, a will also has some downsides like probate and public record.
If you have a considerable estate to plan for or dependents who rely on you for financial support, then a living trust may be the most practical way to achieve your goals. Today, we’re here to talk about the four biggest reasons to build a living trust in addition to your will.
1) No Probate, No Hardship
The single most problematic thing about a will is probate. Wills are tied up in centuries of tradition in how to authenticate, execute, and enact your final wishes. Probate is the long waiting period while the court sorts out your estate and decides when to release your belongings to their inheritors. This creates time for disputes to be raised and, unfortunately, holds assets locked up until probate is concluded.
Your family may not be able to access your bank accounts, claim full ownership of the house, or see any of your wishes fulilled for many months after your departure. A living trust, on the other hand, isn’t subject to probate. Everything you put into the trust is controlled by the trustee. At first, this is you. When you pass on, your designated next trustee will take control and gain full legal access to the trust’s contents. No delay, and much less hardship for those who would otherwise be left waiting for the court to finish its paperwork.
2) Handing Off to a Surviving Spouse
If you are married, it’s important to build a plan in case you pre-decease your spouse. Naturally, you want a way to leave all the aspects of your current shared life in their hands, even if many things are in your name. Homeownership and other property are the most difficult to transfer ownership through a will, but you can place property, money, and other assets into a living trust.
By making your spouse the co-trustee, you both have a solution in case the other goes first. Whoever remains will be left with full trusteeship of your shared assets without having to wait for probate or pay extra taxes as assets change hands. This is because the trust is the official owner of all assets put inside, allowing your spouse to retain uninterrupted access to your house, funds, and shared properties.
3) More Difficult to Dispute
Any will can be disputed. No matter how lawfully written or well-documented, it is possible for someone to argue against the terms. They may claim that you were not in your right mind, under duress, or the will is forged. They may claim that the will is unfair and should be overruled by the court (a real possibility). Or they may claim there is a more recent will that should be adhered to.
In other words, there are many ways to dispute a will and potentially defy your final wishes. A living trust, on the other hand, is nearly impossible to dispute because it is a simple definition of assets and terms on how to access them. You can put many of the same kind of caveats in a trust as you can a will (Ex: Timmy may only inherit if he finishes college) with a far more challenging process for disputes.
4) Keeping Your Affairs Private
Finally, many people don’t realize this but after your death, your will becomes a public record. Anyone who knows how can look up exactly what you wrote and what you left to each benefactor. Every family has its skeletons and, in some cases, things are left unmentioned to spare feelings and respect information told in confidence.
Putting everything into your will, not only will your entire family have access to each clause, but it will also air your family matters out in the open. If there are things you’d rather keep private involving final messages, inheritance, and sentimental gifts, it’s best to handle these through the terms of your living will instead. This way, you can keep family business out of public record and handle certain private matters one by one without making them known to everyone on your list of benefactors.
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So if a living trust is so superior to a will in these ways, why work with both? A living trust is an ideal way to handle property, privacy, and anything you want to leave directly to your spouse or a co-trustee. But a will has power that extends beyond asset management. There may still be terms that are best included in your will rather than written into the trust. And a will can be updated with new terms and final thoughts more easily than a trust. Together, they make the ideal estate planning solution. For more tips and guidance on planning your estate or updating your estate plan, contact us today!