The Top Three Benefits of a Living Trust

The Top Three Benefits of a Living TrustLiving trusts are a valuable estate planning tool with tremendous benefits for both the trustor (the person who sets up the trust) and the beneficiaries (those who will eventually receive the property that is placed inside the living trust). Living trusts are not particularly expensive or complicated for an experienced Arizona estate planning attorney, like the attorneys of Dana and Associates, to set up.

What Is a Living Trust?

A living trust is first and foremost a trust, which in its most basic definition holds title to property and/or assets on behalf of a trustor for the later benefit of beneficiaries. It is a legal entity that exists separately from the trustor, meaning that it can protect assets from creditors and it will exist even after the trustor has passed away. As you may have guessed by the name though, a living trust is created and the assets are transferred while the trustor is still alive. Now, this doesn’t mean that you give up ownership and control of your stuff. The trustor can be named the trustee (the person who manages the property and assets), as long as you also name a successor trustee for after your death or incapacitation. When you create the trust, you also get to spell out your terms for how it should be managed and the distribution of assets upon your death.

1. Benefit #1: A Living Trust Avoids Probate

If you’re researching trusts, then you probably already have heard of the number one benefit: Avoiding probate! When your estate goes through probate, your loved ones will have to hire an attorney and go through the time-consuming process of having a judge oversee and approve all transfers. This is avoided because the trustor transferred title and ownership of all assets to the living trust while they were alive. The living trust then has the authority to disburse the assets to beneficiaries directly, as long as the successor trustee does so according to the outlined terms.

If your estate plan only includes a will, then your estate will have to go to probate to transfer ownership to your beneficiaries. While you can write a will at home for free, your estate will incur costs during the probate process, including attorney fees, court and filing fees, and estate taxes. So, it can actually be less expensive, more efficient, and much easier to pass your estate through a living trust instead.

2. Benefit #2: A Living Trust Provides Greater Privacy for the Trustor and Beneficiaries

 

Benefits of a Living Trust

The probate process is a court officiated proceeding, which means it is a matter of public record. When you die with only a will or with no estate plan at all, your entire estate is essentially published for anyone and everyone to see. We live in the digital age where court records are available online, so when your will or an inventory of your assets is filed with the probate court, your nosy neighbors, curious friends, interested family, and creditors have an all-access pass.

A living trust, on the other hand, does NOT have to be filed with the probate court (unless there is a dispute leading to litigation). This is the perfect estate planning solution if you and your beneficiaries would like some privacy.

3. Benefit #3: A Living Trust Often Saves Money

As we mentioned in benefit number one, a living trust is typically less expensive than a will. To give you an idea, here’s a general comparison of costs.

Will:

  • Cost to prepare the will – You may write it yourself, pay a small fee online, or pay an attorney to prepare it. Also, you may pay to have it notarized to make your will “self-proving” for a faster probate.
  • Probate court filing fee – This is the court-mandated fee to file your will and begin the probate process.
  • Probate attorney fees – Your loved ones may or may not be able to handle the probate process without the help of an attorney. There are deadlines, court appearances, and paperwork to manage that all can add up fast.

Living Trust:

  • Cost to set up the trust – You will definitely want to hire an experienced estate planning attorney to set up your living trust. When it is done correctly, no additional attorney involvement or legal fees are needed even after you pass away. The trust has your terms and ownership of the assets allowing your estate to pass to your beneficiaries as planned.

As illustrated by these two lists, the list of costs for a living trust is much shorter. In most cases, it is truly less expensive to create a living trust than a will and the probate process.

Contact Dana & Associates To Determine Whether a Living Trust is For You or To Create Your Living Trust Today

If you have read all of this and aren’t sure if a living trust is right for you or you’re ready to set yours up, we have a team of knowledgeable attorneys who can help. We have counseled thousands of clients through probate, estate planning, and trust administration. Whether you decide to go with a living trust or another one of our custom estate plans, visit our website or contact our experienced Arizona estate planning and probate attorneys today at [email protected] or (480) 924-4424.