Whether organizing your estate for the first time or revising the plans you have already made, you may feel overwhelmed with the number of available options. Not only are there several ways you can organize your property and assets, but there are also options that can minimize the risk of having beneficiaries dispute property and assets after you pass.
In addition to creating a last will and testament to dictate what you would like done to your property, you may want to consider adding a living trust to your estate plan. Although this type of asset protection may not be ideal for every situation, living trusts offer many benefits to estate owners and beneficiaries alike.
What is a living trust?
According to The Balance, a living trust is a financial entity used to govern your money once you pass. With an irrevocable living trust, the trust takes control of your property and assets once you sign them over to the trustee. Since it is no longer considered your property, you do not have to pay estate taxes on those items. A revocable trust, on the other hand, allows you to make changes to the trust whenever you would like.
What are the benefits?
In addition to avoiding estate taxes, there are several advantages to putting your property and assets into a living trust. This includes the following:
- Avoid probate by directly transferring property and assets to the beneficiary
- Remain private as trust documents are not a matter of public record
- Appoint a trustee to take over if needed
- Minimize hassle and red tape for loved ones left to settle the estate
Furthermore, you can customize how you would like your property and assets dispersed after you pass. For example, the trust will only disperse money to be used for school or allow a beneficiary to receive money after they turn a certain age. This can be helpful to those who have a mental disorder and need help managing money from the trust.
Depending on the specific circumstances of your situation, you can create and customize a living trust to meet your needs.