7 Reasons to Include a Living Trust in Your Estate Plan

 Posted on May 02, 2023 in Estate Planning

Estate planning is crucial for everyone, regardless of their economic circumstances or family relationships. With an estate plan in place, you can make sure your assets will be handled correctly both before and after your death, and you can make provisions to ensure that your loved ones will be cared for properly while also addressing your own needs. While a will is an essential part of any estate plan, it may not be sufficient to protect your assets and ensure that your family's needs will be met. A living trust can be an important addition to your estate plan, and it can offer numerous benefits that other estate planning tools cannot.

Benefits of Living Trusts

A living trust is a legal entity that you can use to hold and manage your assets during your lifetime while providing instructions for how assets will be distributed to different beneficiaries. Assets in a trust are managed by a trustee, and they may be distributed to multiple different beneficiaries. With a living trust, you can name yourself as a beneficiary, ensuring that you can use your assets during your lifetime, and you can change the terms of the trust at any time to distribute assets to beneficiaries either before or after your death.

There are numerous benefits that living trusts provide, including:

• Avoiding probate - Probate is the legal process through which the court supervises the management and distribution of an estate after a person's death. The executor or personal representative of the estate will take an inventory of the estate's assets and follow the instructions in a person's will for how assets should be distributed to different beneficiaries. This process is not only time-consuming, but it can also be expensive, and it can result in family disputes if the terms of a will are unclear. In contrast, a living trust allows assets to be distributed to beneficiaries outside of the probate process, which can save time and money.

• Protecting your privacy - Probate is a public process, and when a will is filed in court, it will be accessible by others, allowing them to see how a person's assets are distributed to their beneficiaries. This may be undesirable if you want to keep your family's financial affairs private. A living trust is a private document, and only the beneficiaries and the trustee will be able to view its terms. This will allow you to keep the details of your assets, debts, and beneficiaries confidential.

• Providing flexibility - Since a living trust is revocable, you will be able to make changes to your estate plan whenever you want. You can add or change beneficiaries, add assets to the trust, or update your instructions for the distribution of assets as your family's circumstances change. This will allow you to account for significant life events such as marriage, divorce, or the birth of children.

• Planning for incapacity - A living trust can also offer benefits in situations where you may encounter health issues that affect your ability to make decisions for yourself. If you become mentally or physically incapacitated, the trustee can manage the assets of the trust on your behalf. This can avoid the need for court-appointed guardianship, which can be expensive and time-consuming.

• Minimizing estate taxes - A properly drafted living trust can help minimize federal estate taxes. By transferring assets into a trust, you may be able to remove the financial value of those assets from your estate, which can reduce your estate tax liability. You can also structure the trust so that it takes advantage of tax exemptions, deductions, and credits. This can ultimately save your beneficiaries a considerable amount of money.

• Ensuring professional management - While you may serve as the trustee of a living trust, you may also name another person, such as a financial expert, as the successor trustee who will be responsible for managing and making distributions to your beneficiaries according to your wishes. Professional management ensures that your assets will be managed and distributed correctly.

• Avoid legal challenges - A living trust can help your family avoid legal disputes related to your estate plan. Since your assets will be owned by the trust, it will be more difficult for expected beneficiaries or creditors to challenge the decisions you have made. In addition, a living trust can be less susceptible to legal challenges based on mental capacity or undue influence, which can be more common with wills.

Contact Our Irving Living Trust Lawyer

A living trust can be a crucial component of your estate plan. As you make plans for the future, it is important to work with an experienced Dallas trusts attorney who can provide guidance on the tools you can use to ensure that your wishes will be followed. At Andrew Dunlap Attorneys, PLLC, we can help you create a customized estate plan that meets your needs and goals. Contact us at 972-807-6357 to set up an appointment and learn more about how we can assist you.

Sources:

https://www.forbes.com/sites/christinefletcher/2018/08/16/9-reasons-why-you-should-consider-a-living-trust/

https://www.investopedia.com/articles/pf/06/revocablelivingtrust.asp

https://www.usbank.com/wealth-management/financial-perspectives/trust-and-estate-planning/benefits-of-setting-up-a-trust.html