Avoid Probate With A Living Trust

 Posted on January 05, 2017 in Estate Planning

Anyone who thinks about planning his or her estate will hear about "wills," "probate" and "living trusts." A will is a document that states where you want your property to go when you die. Probate is the court procedure that makes sure your will is valid and puts it into effect. But what is a "living trust?" To answer this, you need to know a little about "trusts" in general.

Trust are legal devices that let one person "own" property for the benefit of someone else. With a trust, a person can stop being the "owner" of property while still keeping control over it. A trust is created when someone (a "trustee") agrees to hold and manage property for the benefit of someone else, who may later get the property, or the income or benefits it generates. The person who receives these benefits is the "beneficiary."

A living trust is a special kind of trust which has many estate planning benefits. In a living trust, you can transfer property from yourself (as the full owner) to yourself in a new capacity, as "trustee." After this transfer, you still control the property. You receive the benefits of ownership while you are alive. When you die, a "successor" trustee (someone you selected) distributes the property to the people you chose. This takes place without the involvement of the probate court.

A living trust is created by a written trust document, written with a lawyer's help. Your lawyer can also help prepare other papers used to transfer property into the trust. You can place almost any type of property in it, including money, real estate, stocks, bonds and automobiles.

Use of living trusts has grown because for many people, they offer significant benefits. Here are some of the main ones.

• Avoid delays and expense of probate. With a living trust, property can often be transferred after death much faster than by will, since property left by a will has to go through the probate process. Also, the steps to be taken under a living trust can be less expensive than administering a will. So a living trust can avoid delays and expenses of the probate process.
• Privacy. Living trusts offer a lot more privacy than wills because wills must be proved and administered through courts, and court records are open to the public. The contents of a living trust don't have to be made public, so they are easier to keep confidential.
• Lower estate taxes. Depending on the value of your estate, a living trust can help to lower the estate taxes due on your death.
• Flexibility. A living trust can be changed or revoked if you are not satisfied with how it is working.
• Control. A living trust can let you make decisions about how you will be cared for in old age. For example, you can say that trust income will be used to help your family take care of you. Without a trust, if you become unable to care for yourself, a court may have to decide who will take care of you and manage your money.
• Hard to challenge. Another important benefit is that living trusts are usually harder to challenge than wills.

Whether a living trust is the best estate planning tool for you depends on several factors, including your financial situation and potential tax liability. Your lawyer can help you achieve your estate planning goals so that your property goes to your loved ones in the fastest and least-costly manner.