You can avoid Probate through living trusts and reduce or completely eliminate federal estate taxes for your estate. Know about living trusts, their benefits, and their problems.
What is a living trust?
A living trust is an effective way to avoid Probate and transfer assets after your death. It is a legal document that controls the use and transfer of any property you’ve put in trust. Simply, a living trust is a legal body that holds your things of value and after your death, hands over those to the people you have named to inherit.
What are the advantages of a living trust?
One of the biggest advantages of a living trust is that it is very flexible. Using a living trust, you can either transfer all your property, or transfer only some of your assets and use some other means to transfer the remaining assets. Again, after your death, trusts are not made public, while wills become part of the public record during the Probate procedures. Moreover, Probate procedures are very expensive and can take several months or years before they can be handed over to your heirs.
Why they are called ‘Living’?
Living trusts are called in this way as these are created while you’re alive. They are often called ‘revocable’ as you can revoke or alter them at any time and for any reason, whatever it may be. As long as you’re mentally fit, you can yourself control the property you’ve transferred to the living trust. You can sell it, impede, spend or give it away.
What are the disadvantages?
Usually, a living trust costs much more than a normal will. Transferring assets to the trust involves huge costs and paperwork, which is not necessary for less elaborate estate plans. Again, if you’ve a living trust, you should also have a pourover will, an Advance Health Care Directive and HIPAA authorization.