My Comments: This post is for those of you trying to deal with matters that sooner or later will happen in your life that need thinking about. As a professional in financial services for many years, I can tell you tales about people who paid money to establish a living trust and then ignored the reality of transferring assets to the trust.

What I mean is that having a living trust is a waste of time if you don’t transfer ownership of your assets to the trust. You can still manage and use everything, sell stuff, buy new stuff, but you’re acting as a trustee, and not as the owner.

If you die and everything is still owned by you, you’re subjected your assets to probate and the trust was wasted effort, time and money. What follows is a short introduction to the concept to help you decide what to do.

by Stefon Walters / 2 FEB 2024 / http://tinyurl.com/4hatr3z2

A living trust is beneficial but may not be the best route for simpler estates.

I’m sure many people would agree that one of their goals in life is to get to the point where they can pass on an inheritance to their loved ones. Whether it’s a child, spouse, or someone else who means a lot to you, being able to provide for them even after you’re no longer here can be comforting.

Unsurprisingly, I’m sure, the inheritance process isn’t always straightforward. There are multiple ways to pass on an inheritance, including through a living trust. A living trust has many great aspects, but is it the best way to pass on an inheritance? Well, it depends.

What is a living trust?

A living trust is a legal arrangement where a trustor (whoever creates the trust) places assets — whether money, investments, real estate, or whatever — in a trust to be managed by a trustee for their chosen beneficiaries. A key difference between a living trust and a will is that a living trust is typically still able to be changed while the trustor is still living (hence the name).

This is why living trusts are also often called revocable trusts. A revocable trust can be changed or canceled by the trustor during their lifetime, while an irrevocable trust is essentially unchangeable once set up. The distinction between the two is crucial because it affects how much flexibility and control the trustor has over the assets while living and after they pass away.

The benefits of a living trust

One of the main reasons to use a living trust is to avoid probate, which is a court process used after a person dies to determine a will’s validity and oversee the process of distributing the relevant assets to heirs. Probates are good for legal oversight, but they can be time-consuming, with many taking months or years to complete.

There can be lots of costs associated with probates. There are lawyer fees, court costs, asset appraisal fees, and other costs involved in the process. This can significantly chip away at the inheritance that was left behind.

There’s also the aspect of privacy. When a will goes through the probate process, it typically becomes a public document that anyone can access. Information like your assets (and their value) and who inherited them will be public knowledge. With a living trust, those details won’t become part of the public record.

Having extra privacy during what can be a sensitive time can be especially helpful for high-profile individuals or people who want to avoid potential conflicts and disputes regarding their estate.

A living trust may not be for everyone

Although it’s flexible and has many great benefits, a living trust isn’t the right option for everyone. People with a simpler estate situation could find a standard will to be sufficient. For example, if you have an account you want to split evenly between two children, a will could get the job done without the logistics you could face with a living trust.

The process of setting up and maintaining a trust is generally more complex than establishing a will. You need to draft the trust documents, transfer assets into the trust, and either manage it yourself or have someone else manage it. You may also need to deal with special tax issues on a regular basis. With a will, you generally need to create it, sign it, and ensure it complies with your state’s laws.

Ultimately, whether a living will is the best way to pass on your inheritance comes down to the complexity of your estate and the specific needs of your beneficiaries. What works for someone may not be the best route for you. Consulting a legal expert can provide tailored advice relevant to your specific situation.