This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.
There are many important steps you can take in the course of your estate planning to set your loved ones up financially upon your passing. One big step is to put a life insurance policy in place so that the people who depend on you financially aren't left in the lurch. Another is to figure out how you want to pass assets to your loved ones.
You have a few choices in this regard. Many people opt for a basic will. If your estate is pretty simple, that may be the best option. But you may also want to consider a living trust.
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If you're not familiar with a living trust, it's a legal agreement that allows you to transfer assets to other people. Before we go any further, it's important to note that while you may be able to use online software to create your own will without using an attorney, living trusts tend to be more complicated. So you shouldn't plan on establishing one without help.
A living trust may also cost more to put into place than a will. And the cost you're looking at will generally hinge on the extent and nature of your assets. But here are a few reasons to seriously consider a living trust to seamlessly transfer an inheritance to the people you care about the most.
1.You want control over your assets while you're still alive
In the course of your lifetime, it's not unusual to change your mind about who inherits your assets. The nice thing about a living trust is that you're able to make changes as you see fit since you maintain control over your assets as long as you're alive.
If there's a divorce in your family, for example, you can remove someone from your trust. If there's a marriage or grandchildren come into the mix, you can work them in.
2. You want your loved ones to get their inheritance sooner
When you write a will to pass assets down to your heirs, your loved ones are subject to a process called probate, which is how a court proves a will's validity. One problem with probate is that it can be lengthy. And the more complex your estate, the longer it might take to complete that process, thereby delaying your inheritance from reaching the people it's meant for.
Another neat thing about living trusts is that they aren't subject to probate the way wills are. So putting one in place could mean a quicker transfer of assets.
3. You want your family's finances to be a private matter
Delaying an inheritance isn't the only problem with probate. A will that goes through that process becomes a matter of public record, so anyone can look up the details of your will and see what your loved ones are inheriting.
Since a living trust doesn't go through probate like a will does, the details of that trust remain private. If that's important to you -- and if you suspect it's important to your heirs -- you may want to look at a living trust for this reason alone.
Although a living trust isn't your only option for passing down assets, it's one worth looking into. It pays to consult with an estate planning attorney who can tell you what the process might entail and give you a sense of the costs you're looking at. That way, you can make an informed decision.
