This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.
No matter how much money you earn or how much you're able to save, you may have the goal of leaving an inheritance behind to your loved ones, whether it's grown children, grandchildren, or other people who are important in your life. And to that end, it helps to have a plan.
Many people are familiar with the concept of writing a will and using it to spell out their last wishes. By contrast, you may not be as familiar with a living trust . But it pays to consider one for these benefits.
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1. You can control your assets and change your mind as needed
A living trust is a legal arrangement that allows you to pass assets on to other people. You can place different types of assets into a trust, whether it's real estate, stocks, or bonds.
But just because you designate a given asset as one you want to pass along doesn't mean you're stuck with that choice. The nice thing about living trusts is that they allow you to maintain control over your assets and make changes as necessary.
Let's say you own a rental property and want to pass it down to your grown son and his spouse. If your son then gets divorced, you can remove his ex-spouse as a beneficiary. And if he remarries, you can add his new spouse.
2. You can potentially speed up your loved ones' inheritance
When you use a will to pass assets along, it's subject to a process called probate, which is when a court proves that a will is valid. Not only can probate be expensive, but in many cases, the process can drag on for months or even years.
Probate often forces people to wait to receive an inheritance. With a living trust, you can speed up that process. That's because living trusts aren't subject to probate.
3. You can protect your family's privacy
Did you know that anyone can look up your mortgage and see how much you paid for your home? Unfortunately, wills work similarly.
When a will goes through probate, it becomes a matter of public record. This means that any nosy person can see exactly what assets your loved ones are inheriting.
With a living trust, the details of your estate get to remain private. So if, for example, you're giving a distant cousin a large share of your estate and you don't want other family members of yours to know about that, they may not end up any the wiser.
Clearly, there are plenty of good reasons to use a living trust in the course of your estate planning . It pays to sit down with an attorney and see what your options entail. And remember, living trusts aren't just for the wealthy. You can have a modest estate and still benefit from a living trust in the sense that you can retain control of your assets, avoid probate, and ensure that the details of your financial life are kept under wraps.
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