A living trust is a legal document that allows you to transfer your property and assets to another person while you are still alive. This can be helpful if you want your loved ones to avoid probate court after you die.
Having a living trust has pros and cons, and it is important to understand both before making a decision.
The benefits and drawbacks of a living trust
With a living trust, you establish how your assets will be managed in the event of your death or incapacity. You can specify exactly who will receive your assets and when they will receive them. This can help avoid costly probate proceedings and keep your family from having to make difficult decisions about your estate during an emotionally charged time.
In addition, a living trust can provide greater flexibility than a traditional will. For example, you can create trusts for specific purposes, such as providing for your grandchildren’s education or caring for a disabled child.
Furthermore, they are not part of the public record, so your affairs will remain private. Finally, they can help save on taxes because the trustee can invest your assets in a way that minimizes them.
There are a few potential drawbacks associated with setting up a living trust. One is that it can be costly to create and maintain. Additionally, it can be time-consuming to transfer all of your assets into the trust, and there is always the possibility that something could go wrong in the process.
Finally, if a trust is irrevocable, the settlor cannot make any changes without the consent of all beneficiaries. This can create problems your life circumstances change.
Since a living trust may be complex and needs careful consideration, you will need legal guidance in deciding if it’s right for you and help you create one that will suit your needs.