No matter where you are on your life’s journey, establishing measures that protect you, your loved ones and your assets is essential for long-term security. Contrary to what many believe, you don’t need significant wealth to benefit from estate planning.
A living trust is an important consideration in planning for the future. The benefits of a living trust go beyond establishing an inheritance for your heirs to include protections for you while you are still alive. At AmeriEstate, we want to ensure you have the information needed to preserve your financial well-being and that of your heirs.
Understanding What a Living Trust Is
A living trust is an estate-planning tool and legal arrangement that takes effect when you and a notary sign off on the documents. The trust serves two overarching purposes. First, it ensures your wishes for your welfare are followed while you are still alive. Second, it protects your financial assets before and after your death.
When you establish a living trust, you can name yourself as the trustee, providing you with the most significant benefits of a living trust. As trustee, you maintain complete control and decision-making power over the assets in the trust. You will also identify someone else as a successor trustee who will take the reins should you become incapacitated or pass away. The successor’s role is to follow the directives you lay out in the trust for your care or asset distribution upon death.
Though a living trust can be either revocable or irrevocable, in most instances, a revocable trust is the preferred option. This trust option allows you to amend its terms or dissolve it altogether. After you pass, assets in the trust will go to your designated beneficiaries according to the condition you set.
Discovering the Benefits of a Living Trust
Living trusts provide numerous advantages that begin as soon as the trust takes effect if all your documents are in order and legal procedures are followed. Though you can go the do-it-yourself (DIY) route, AmeriEstate’s living trust professionals ensure your trust adheres to legal requirements, and you obtain the living trust benefits that serve you best.
Offers Protection After Incapacitation
Should you become incapacitated from physical or mental illness or after a serious accident and can no longer make decisions regarding your care or financial affairs, a living trust stipulates your wishes for both. To obtain these benefits of a living trust, you need:
- Durable Power of Attorney: Establishes who can act on your behalf in managing your personal and financial affairs
- Advanced Healthcare Directive: Sets up your healthcare wishes and appoints the person you want to make medical decisions on your behalf
- Do Not Resuscitate Orders: Establishes your wishes for whether to receive CPR if your heart stops due to a medical emergency
A living trust's incapacitation protections are valid whether your incapacitation is temporary or permanent.
Allows Your Heirs To Avoid Probate
Most people think that a will is sufficient for allocating assets after death. However, wills are problematic for several reasons. Their primary issue is that a will must go through probate court proceedings, during which a judge has the final say about who gets what.
The judge does not have to adhere to your wishes and others can contest still the will. Furthermore, depending on the complexity of your will, the people involved and the size of your estate, probate can end up being a lengthy and expensive process,.
One of the primary benefits of a living trust for most people is that their heirs avoid probate. A living trust saves them the expense of court proceedings. Your loved ones will also likely receive their inheritances much faster if they don’t have to wait on the probate process.
Tax Implications
Though your heirs save money by avoiding probate, there are generally no real tax benefits of a living trust if you choose the revocable form. You still must pay income taxes and your heirs will likely pay an estate or gift tax. However, if tax savings are important to you, you may want to consider an irrevocable living trust, which allows you to contribute an annual tax-exempt gift to fund up to the Internal Revenue Service’s exclusion limit.
Protects Your Privacy
Your affairs should be just that: Yours. Unfortunately, your affairs will become public if you utilize a will to express your wishes for distributing your estate after you pass. The law demands that your heirs turn over all documentation regarding your estate to the court, which becomes part of the public record. Anyone can view them and decide to contest the will’s contents.
Another one of the benefits of a living trust is that your affairs remain private. If you work with AmeriEstate, our professionals maintain strict confidentiality protocols. Any information about your finances, assets and health remains private. A living trust also protects your heirs from creditors who might come after your estate after you pass.
Protects Minor Children
If you have minor children, you need a living will to protect their interests and future should anything happen to you. Though a will allows you to name a guardian, it does not guarantee the court will adhere to your wishes. Guardianship is a part of the probate process. Furthermore, the court determines who handles your estate and turns over your children’s inheritance all at once when they turn 18.
A living trust puts you in charge of determining who cares for your children and how and when they receive their inheritance. The documents in a trust carry more legal weight than a will if done correctly. Therefore, when you appoint a guardian, you can rest easy knowing your children will be in good hands. You can also determine at what age your children receive their inheritance and dole it out over time rather than all at once.
Ensuring You Get the Complete Benefits of a Living Trust
To ensure you receive all the benefits of a living trust, you should enlist trusted professionals to assist you in setting up the trust and completing documentation. AmeriEstate is here to help. We provide personalized services and ensure all details are in order before you and a notary sign off on the trust documents, giving you peace of mind that you and yours are protected. Contact us today to schedule a free consultation.