Although many people equate an “estate plan” with having a will, there are many advantages to having a trust-based estate plan. While there are other estate planning tools (such as joint tenancy and transfer on death accounts, to name a few) only a trust provides comprehensive management of your property in the event you can’t make financial decisions for yourself (commonly called legal incapacity) or after your death.
ADVANTAGES OF A TRUST
Some of the primary benefits of having a trust is that it provides the ability to transfer your assets privately, saving time, and expense of probate. This process can easily cost thousands of dollars and often takes from several months to more than a year to resolve.
Beyond the cost and time of probate, the probate court proceeding makes your financial life, assets, and last wishes of public record. Such records could be easily discovered by creditors or financial predators looking for opportunities.
A trust, on the other hand, creates privacy for your personal matters as your heirs would not be made aware of the distribution of your assets.
FINANCIAL SUPPORT
A common reason to create a trust is to provide ongoing financial support for a child or another loved one who may not be able to manage these assets on their own. Through a trust, you can designate someone to manage the assets and distribute them to your heirs under the terms you provide. Giving an inheritance to an heir directly and all at once may have unanticipated ancillary effects, such as disqualifying them from receiving some form of government benefits, enabling and funding an addiction, or encouraging irresponsible behavior that you don’t find desirable. A trust can also come with conditions that must be met for the person to receive the benefit of the gift. Furthermore, if you ever become incapacitated, your successor trustee – the person you name in the document to take over after you pass away – can step in and manage the trust’s assets, helping you avoid a guardianship or conservatorship (sometimes called “living” probate). This protection can be essential in an emergency or in the event you succumb to a serious, chronic illness. Unlike a will, a trust can protect against court interference or control while you are alive and after your death.
Trusts are not just about avoiding probate. Creating a trust can give you privacy, provide ongoing financial support for loved ones, and protect you and your property if you are unable to manage your own assets. Simply put, the creation of a trust puts you in the driver’s seat when it comes to your assets and your wishes as opposed to leaving this critical life decision to others, like a judge.
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Disclaimer: This article is intended to serve as a general summary of the issues outlined therein. While this article may include general guidance, it is not intended as, nor is it a substitute for, a qualified legal advice. Your receipt of this article from Lexern Law Group, Ltd. (the “LLG”) or any of its attorneys does not create an attorney-client relationship between you and the LLG. The opinions expressed in this article are those of the authors of the article and does not reflect the opinion of the LLG.