A living trust is a vehicle that allows you to control your assets upon your death. Despite the laws in your state, once your trust is established, you can leave your assets for the benefit of the people intended. Living trusts come in multiple formats, so it’s important you discuss your intentions with an attorney who can help you set up your trust.
Trusts Vs. Wills
Creating a will can allow you some determination of your assets. However, a will may not protect your assets from probate. With vehicles like a living trust in place, your assets will easily pass from your estate into the possession of your heirs as you intended all along. Depending on where you live and the size of your estate, probate will be time-consuming and may eat into the amount you want to leave to your loved ones.
How Does a Living Trust Work?
Living trusts come in four different formats. Depending on your situation, you can set up a
- Revocable trust, which you can modify over time as needed
- Irrevocable trust, which cannot be modified but can protect your assets from lawsuits
- Asset protection trust, which can protect your assets from creditors
- Charitable trust, which feed directly into your favorite charities
Depending on the size of your estate, you may want to start with a revocable trust and create a charitable trust for giving to the causes you truly value as well. Eventually, you can move the assets in the revocable trust to an irrevocable or asset protection trust once you fully retire from the working world.
Family Structures Have Changed
If your assets are below a certain threshold at the time of your death, they would ordinarily be split between your spouse and your children. However, if you have living siblings or half-siblings, the assets may need to be split differently. This splitting by law could mean that someone you barely know or have never met could get the items and dollars you worked to leave to your family.
For those who have estates of more than a set dollar amount, those assets can immediately go into probate. As an example, in the state of California, the asset cut-off for probate is generally $150,000. To make sure that your loved ones are not waiting for the assets you intend for them, it’s a good idea to set up an appointment with a living trust attorney to discuss your current financial situation, your goals and intentions, and the best way to shield your assets and provide for your loved ones at your death.
Singles, Spouses and Children
A revocable living trust won’t take long to set up and will provide you with peace of mind. Living trusts are especially important for single people. If you have your assets only in your name, in the event of your death, they will likely wind up in probate. Every state’s dollar threshold is different, so your attorney can help you determine the best way to shield your home, retirement accounts, savings and life insurance policy from the time and expense of probate.
A living trust is also crucial if you have children in a second marriage. If you haven’t defined where you want your assets to go, your second spouse may find themselves trying to care for small children while your assets are split evenly between grown, independent family members and young children. How you split up your assets in the trust is completely your business and certainly something you’ll want to keep private. Your will would be a public document that anyone could read once it’s filed. Your living trust will be private until you are incapacitated or pass on.
Facing the Difficult Things
It’s not easy to consider a world that doesn’t include you. However, if you’ve spent time working and saving to make sure those who come after you benefit from your efforts, those efforts can be wiped out if you skip the paperwork. A living trust can be set up quickly and will probably be much cheaper than probate. It will also give you final control over your assets.
Every family is different, but the court system is quite consistent. To avoid conflict and probate, contact an attorney to set up a living trust. Your intended heirs will be protected by your efforts today.