Most people use living trusts as part of their estate planning in order to avoid probate. That is easy to understand, as the probate process can be a lengthy and costly court proceeding. Before deciding whether you need to create a living trust, you should consider the advantages and disadvantages of having a living trust. Remember, there are many other options if you are looking to avoid probate. Speak to a Kansas City living trust attorney if you have questions.
What is a Living Trust?
A living trust is basically a specific type of trust created so that it becomes effective during your lifetime, as opposed to only becoming effective after your death. As with all other trusts the property you transfer to the trust will be managed by the trustee who holds the property. That property is then later transferred to your beneficiaries by your trustee.
What are some of the advantages of a living trust?
The most obvious advantage is that creating a living trust can allow your estate to avoid probate. This will ultimately save your family the time and expense of the court process. Having a living trust can also help your family to avoid potential complications that commonly arise when it comes time to distribute your estate. Living trusts also provide some important tax advantages, as well. Finally, unlike probate, the terms of your living trust remain private. If keeping the nature of your assets or finances private is important to you then a living trust is probably a great alternative to a simple will.
What kind of legal protections do living trusts provide?
There are a few legal protections that a living trust can provide that other estate planning tools may not. First, a living trust is a written legal document which means it will always be enforceable by the probate court. That means if there are any challenges made, the terms of the trust agreement will be enforced as the best evidence of your intent.
Consider adding a durable power of attorney to your estate plan
You will likely need to create a durable power of attorney, along with your living trust. It is common for clients to name themselves as the trustee of their living trusts so they can maintain control over the trust property during their lifetime. The successor trustee you identify in your trust document will take over upon your death. However, your successor trustee may not have the authority to manage any additional property you owned if it was not included in the living trust. That is where a power of attorney comes in.
Because living trusts are revocable, they don’t provide the benefit of reducing or eliminating estate tax liability. While there are several types of trusts that can provide tax advantages, living trusts typically do not. Legally, because a living trust is revocable, meaning you can change it at any time, the property still belongs to you, instead of the trust. Nor do living trusts provide asset protection for the same reason. If you think you have an estate tax issue, there are other estate planning strategies we can discuss with you in a personal consultation.
You can be the trustee of your own living trust
One of the benefits of a living trust is that you can name yourself as trustee. That way, you can maintain complete control of the terms trust and all of the assets during your lifetime. That also means that you can continue to buy or sell assets, just as you did before those assets were transferred to the trust. Ultimately, you maintain complete control of your property until your death. As long as you remain legally competent to handle your own affairs, you retain control over your trust property. If you are married, you can also name your spouse as co-trustee.
If you have questions regarding living trusts, or any other estate planning matters, contact a Kansas City living trust attorney at Gaughan & Connealy for a personal consultation either online or by calling us at (913) 262-2000.