Do I Need a Living Trust?
There are three primary reasons for creating a living trust as part of your estate planning process. While there are some costs associated with creating a living trust, your family will be grateful for the living trust after your incapacitation or passing. Your lawyer will help you determine the right way to set up the trust. For the sake of this article, we will be discussing a revocable living trust. (Irrevocable living trusts are mostly for the extremely wealthy.)
1) Living trusts are a quick way to avoid having your assets frozen in probate. If you only have a will, your assets still have to go through the court system. With a living trust, you assets avoid probate court and go directly into the hands of the named beneficiaries.
2) If you become incapacitated (e.g. in a coma), your assets will just sit in guardianship or conservatorship until you recover. With a well-worded living trust, your assets can pass to your beneficiaries without a court-appointed guardian.
3) Living trusts are private. If your assets have to pass through probate court, then anyone can log online or stroll down to the hall of records and look at how much money you had when you died and whom you gave it to. Probate court proceedings are public information. Living trusts circumvent probate court leaving your assets private.
As you acquire more assets, you have to update your living will. Anything not specified in your living will has to pass through probate court.
Just to be clear, living wills do not help avoid estate taxes. If your estate is large enough, Uncle Sam will always have his share.
In conclusion, a will is not enough. Estate planning is complicated even for people with limited assets. A proper estate plan includes a will, a living trust, and documentation of your medical wishes. These pieces work together to form a clear, well-considered plan.