Is a Living Trust Really the Best Way to Pass an Inheritance to Your Family?

This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.

One of the toughest financial tasks you might have to tackle in your lifetime is deciding what becomes of your assets once you're no longer around. But despite the inherent discomfort of estate planning, it's an important item to tackle.

Now in the course of your estate planning , you may be looking at different ways to pass assets onto your children, grandchildren, or other people you care about. And you have a few options.

Image source: Getty Images.

You could write a will that outlines your final wishes. But you may also want to consider using a living trust to pass an inheritance on to your family.

There are a number of benefits to doing so. But it's important to look at the big picture.

The upside of a living trust

A living trust is an arrangement that allows you to pass on assets. You do so by placing assets into the trust that your designated beneficiaries inherit.

The nice thing about a living trust is that you maintain control over your assets while you're alive. If you change your mind about a given asset after placing it into your trust, you can remove it. You can also add or remove beneficiaries as you see fit.

But perhaps an even greater benefit of a living trust is that it won't be subject to probate like a will. When you pass away and leave a will, your loved ones are forced go through probate, which is a court's way of proving a will's validity.

Probate can be a long process, and also, an expensive one. And in the course of probate, your will also becomes a matter of public record. Goodbye, privacy!

With a living trust, your loved ones might get access to their inheritance sooner, and without the same hassle as probate. Just as importantly, their privacy is protected so that no one can simply do a records search and find out how much money they inherited.

Issues to consider with a living trust

If there's one drawback to putting a living trust in place, it's the cost. You should expect to spend more on a living trust than a standard will. And the more complex your estate is, the more your attorney fees might climb.

Granted, if your estate is complicated, you might also pay more for an attorney to help you with a will than someone with a more basic financial situation. But you should see what costs you're looking at before making your decision.

You should also know that placing assets into a living trust won't necessarily benefit you from a tax perspective. Assets you place into the trust are subject to whatever taxes you'd normally have to pay. If you're working and earn $150,000 a year, you can't, for example, place that money into a trust to avoid paying income taxes on it.

But all told, a living trust may be an estate planning tool that's beneficial to you and your family. So it pays to discuss the option with them, and also, with an attorney who can review the pros and cons as they relate to your personal situation.

The $ 22,924 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $ 22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy .