The advantages of using a living trust in addition to a will

Many people incorrectly believe that only millionaires should implement a living trust as a major component of a foundational estate plan. For anyone whose total individual assets exceed $100,000, a Trust must be created. Remember, that $100,000 number includes your house, your bank accounts, your car, your brokerage accounts, jewelry, paintings, baseball card collections, and yes, it even includes any life insurance policies you own at the time of your death. Although the beneficiary will collect the full benefit amount without any tax liability, her estate will be affected by an estate tax on that benefit amount.

There are four main advantages to using a living trust for your estate planning needs over relying entirely on a will.

First, all wills must be probated. Everything you own at the time of his death must be probated. Attorneys’ fees range from three (3) to ten (10) percent of the estate. Personal representatives and executors are also entitled to a fee. The assets of the trust do not go through probate. Thus, you save attorney’s fees and executor’s fees. For more information on the dangers of probate, please contact my office for a copy of the article, Avoid succession at all costs.

Another advantage of using a living trust is the efficiency with which assets can be currency. The probate of a will usually takes between six (6) months and two (2) years. If an estate tax return must be filed, probate takes a minimum of one year. I have a client who is entering his fourth year of succession. All the time, the assets are immobilized and cannot be enjoyed by the beneficiaries. Trust assets, on the other hand, can be distributed without the involvement of a lawyer or court and can therefore be distributed more quickly. In many cases, it is as simple as the Trustee providing a copy of the Trust and a Death Certificate to access and distribute the assets.

A third advantage is control. With a will, once his assets are distributed to his heirs, he no longer has control over them. Your beneficiaries may frivolously spend your inheritance on cars, drugs, alcohol, or worse. If they are responsible enough to save the money they are given, it may be taken from them through litigation, divorce, or even creditors. By using a Trust to distribute your assets, you can protect your beneficiaries from losing the assets you gave them and from anyone else trying to take the assets from them. When you die, your living trust becomes an irrevocable trust and forms a layer of asset protection for your beneficiaries.

Another way that a living trust is superior to a simple will is privacy. Upon death, wills are recorded and can be viewed or purchased by the public. The will is made public, as are any disputes arising out of it, which can cause embarrassment for your family. Trusts do not have to be registered. If you prefer, no one needs to know the exact terms of your Trust except you, your attorney, and the Trustee you name as the person or entity charged with enforcing the Trust.