Do I need a living trust as part of my estate plan?

When it comes to estate planning, many people believe that a will would carry out all of their needs. Although this is true for some, depending on your personal goals and financial situation, supplementing your will with a trust may better fit your wishes and goals.

In a trust, you designate property become part of it. The property you designate as trust property is managed by a party called the trustee. The trustee must manage the property in the trust according to your instructions outlined within the trust documents. Additionally, the trustee owes a fiduciary duty to act in the best interests of the beneficiaries of the trust-persons or institutions you designate to ultimately receive the assets within the trust. Although the trustee is often a third party, in many cases you may serve as trustee.

There are many different types of trusts to serve various purposes. However, one of the most common types of trusts is a living trust (also called an inter vivos trust). This type of trust is created while you are living and is completely revocable. This means that the trust may be canceled or the terms of it amended during your life. After you die, the assets in the trust are handled in the manner in which you specify. Although this sounds like the function of a will, trusts offer several other benefits that wills do not.

A greater degree of flexibility

Trusts allow you more options with regard to the distribution of your property than a will does. As a result, you have more power when it comes to controlling the manner and timing of distributions. This can be especially helpful if you have minor children. If you only had a will, the children would receive their inheritances pursuant to the will when they turn 18. However, a trust would allow you to delay distributing to each child its share of the trust property until a time of your choosing. For example, you could set up your trust to distribute your children's shares when they finish college.

Probate avoidance

Assets in a trust, do not have to clear probate before they may be distributed to your beneficiaries, so they can start receiving their inheritances earlier in most cases. Assets distributed by a will, on the other hand, must clear the probate process before they may go to your heirs, which can take years after your death. By avoiding the probate process, a trust also allows your estate to avoid the expenses associated with the process, which can be significant.

Trusts may also be beneficial if you own property in another state. With a will, the property would have to clear probate in the state where the property is located. This is called ancillary probate. However, if you title your out-of-state property in the name of your trust, ancillary probate may not be necessary.

Privacy

If you would like to keep the terms of your estate plan out of the public eye, a trust can help you achieve this. Since probate proceedings are public records, virtually anyone can view the contents of the will and documents of the proceedings. However, trusts skip the probate process, so you can keep the terms of your estate plan, identities of your beneficiaries and the value of your estate a secret.

An attorney can help you

Although a trust may sound like a good fit for you, it may or may not be feasible, depending on many factors. An experienced estate planning attorney can consider your unique circumstances and advise you further on whether a trust would be a logical addition to your estate plan.