This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.
Despite its importance, estate planning isn't the easiest process. That's the downside. The silver lining, however, is that it's a blessing to be in a position to need estate planning. It generally means you have assets and loved ones you're eager to care for even after you're gone.
A major part of the estate-planning process is deciding how you want your assets distributed after your death. There are several options, including using a living trust . A living trust can be more complex than options like a standard will , but it also has notable benefits that make it a great option.
If you're in or approaching the estate-planning process, here are three reasons to consider going with a living trust.
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1. You can avoid going through probate
When you pass away with a will, it's subject to a court process called " probate ." During probate, a court will verify that a will is valid and legally binding (i.e., not forged or made under distress). On one end, this court oversight provides some structure and protection. On the other end, it's not always the most pleasant process to go through.
The major problems with the probate process are the time and cost. You could be going through the process for months or years, and your beneficiary won't have access to the inheritance during that time. That could be trouble for people who need the funds for immediate living expenses or financial obligations.
Probate costs are set by states, so they vary quite a bit. In most cases, it'll be set percentages for set estate values.
2. You have more privacy with a living trust
Once a will goes through probate, it becomes part of the public record. That means almost anyone can access information about the assets, their worth, who's receiving them, and other relevant information.
Having all the information about your will readily available can open up conflict opportunities (especially between families) and attract financial predators. You could have family members who felt entitled to more or an influx of "financial planners" who don't have your best interest at hand. There are countless instances of both happening.
Since a living trust doesn't go through probate, it doesn't become part of the public record. This privacy is crucial for people who want to avoid unwanted attention that can often do more harm than good. Whether it's a celebrity, a high-net-worth individual , or your everyday person who just values privacy, the discretion of living trusts is much appreciated.
3. Living trusts offer much more flexibility
A living trust can be revocable or irrevocable . An irrevocable trust cannot generally be changed after it's created. A revocable trust can, however. As long as certain events haven't happened to make the living trust irrevocable -- such as a specific triggering event outlined in the trust -- the person who created it (called the grantor) is free to make changes or delete it completely.
This flexibility could be useful if certain life events change your circumstances. You may have an additional child, get married or divorced, or decide to change when assets can be distributed. Whatever the case, small or big, you have the flexibility to adjust a living trust accordingly.
You can usually make minor changes with a simple amendment, but more significant changes could require you to redo the whole trust. If you decide to make changes, prepare to potentially pay additional attorney and administrative fees. You can also change or revoke wills, but it's usually a more formal and costlier process.
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