03/19/2023
Living trusts or sometimes called revocable living trusts are legal vehicles people use while they are still alive and after they pass away. Assets are retitled to their trust while they are living. They still maintain control over the assets as if nothing has changed, but they get an already settled incapacity plan and an after-death plan put in place. Just like creating a business entity for liability protection, a living trust creates a layer of protection, privacy, and ease of administration that some people want and need during time of emergency, illness, old age, and death.
1. Sometimes the transition to incapacity is difficult (think Alzheimer's and dementia). Putting property into a trust now with trustee support can smooth that transition.
2. Trying to manage assets using a Power of Attorney can be difficult. Power of Attorney documents need to be frequently updated (the signatures/dates), require capacity at the time signatures are updated, and sometimes proving incapacity is tricky. A trust can alleviate all these issues.
3. Having real property in different states without a trust means your loved ones will have to pay for a probate in each state where the properties are located when you die. With a trust you retitle each property to the trust while you're alive. (You can still sell/rent/etc.) When you pass, the "title" of the property is already in one place where YOU are "located" and so there is no need to probate the real property.
4. Doing work on the front end while you're alive and well can help make things simple for your spouse when you die. They won't have to worry about (or pay for) a complicated probate. Think about a living trust can a front-end probate process. Though creating a living trust is more expensive and time consuming than a simple will-based plan, it is leagues cheaper than the costs of a complicated probate.
Extra Reason: Privacy. Probate processes are public affairs. Creditors, family (good and the bad), the public, etc. can see the asset inventory. If an asset, however, is titled to a trust and that's where it's supposed to be, then it's not recorded on the probate inventory.
Living trusts are a great option, but they aren't for everybody. You really need a professional to listen to your family and financial dynamics FIRST before having your heart set on a trust. You can get that analysis with us. Reach out and we can help you get started today.
