When should you use a trust instead of a will? Let’s examine the objectives we can address if you utilize the right trust as the centerpiece of your estate plan!
1) You Value Your Privacy
We’re all safety-conscious when it comes to financial information. There are many reasons we don’t want the entire world to know about our financial matters. Unfortunately, if you state your final wishes in a simple will, that simple will must be admitted to probate– which is a public proceeding! This means public records, and can lead to unwanted public access to your private information.
Virtually anyone can access these records to find out how you distributed your assets. It’s a loss of privacy and may cause an uproar among family members who feel “left out,” or as though they didn’t receive the share they deserved.
In comparison, living trusts are administered outside of probate. This maintains your confidentiality. If privacy is a priority for you, you should consider the utilizing a living trust instead of a will.
2) You Want to Facilitate Timely Inheritance Distributions
The probate process typically takes at least six months, and more complex cases can take considerably longer. No inheritances will be distributed to your heirs while your estate is passing through probate, and we can all imagine the problems– financial and otherwise– this waiting period tends to cause.
Since the court is not involved when a living trust is utilized, there is no court mandated waiting period. Your trustee has significantly more flexibility in comparison with the executor of a will.
3) You Want To Prepare for Possible Incapacity
You are the trustee of your own living trust while you are alive. This grants you total control of your assets. But what if something happens? For example, some 30 percent of Americans develop Alzheimer’s disease late in life, and that’s in addition to the other potential causes of cognitive impairment that may pop up along the way.
In addition to age-related cognitive decline, we’ve known some elders who became unable to handle their own affairs when they were battling serious medical conditions.
You can name a disability trustee when you establish a revocable living trust. This gives you some control in accounting for potential future incapacity. The fiduciary you choose is charged with stepping into the role of a disability trustee and looking out for your financial well-being if you should become cognitively impaired.
4) You Are Concerned About Reckless Spending
Simple wills generally distribute assets as lump sums. There is no asset protection, and there are no spending safeguards after the estate has been probated and closed. What if your loved ones are not ready to handle this much money? How can you protect your children from the predators, pushers, and pretenders who will try to drain their newfound prosperity?
You do not have to leave your loved ones to their own whims if you have a living trust. You can include a spendthrift clause.
Your trust becomes irrevocable after your death. What does this mean? For one thing, your beneficiaries cannot directly drain the principal. Assets that remain in your trust are generally protected from the beneficiaries’ creditors, which provides some safety and peace of mind.
You can also curtail spending by leaving instructions for your trustee. For example, you can instruct your trustee to distribute a set amount of money each month. If you’d rather tailor the amount more specifically, an attorney can work with you to find an incremental payment system that best fits your loved ones and meets your needs.
5) You Would Like to Create a Joint Estate Plan
Let’s say you’re married (this may not be very difficult to imagine). You and your spouse may use a revocable living trust to leave your respective shares in jointly owned property to one another.
You can act as co-trustees, with the surviving spouse would be the sole trustee after one of you passes away. An advantage to consider is that the survivor will already have an estate plan in place. Why? Because your trust would still be active.
Separate (individually owned) property can be conveyed into the trust as well. You do not even have to name your spouse as the sole beneficiary of the personal property.
The surviving spouse cannot change the terms regarding the distribution of their spouse’s separate property. This factor tends to become relevant in situations where there is a subsequent marriage and new children or a new family come into the picture.
Schedule a Consultation Today!
If this all seems a little overwhelming, give us a call. A living trust is just one option among several. The right one for you depends on several factors, which is why we’ll want to get to know you during an initial consultation. We work with you to find the right estate planning solution for both yourself and your family.
You can schedule a consultation if you call us at 512-258-9455. Alternatively, feel free to use our handy contact form. We look forward to hearing from you.
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