Even with a last will and testament in place, you may still want to create a living trust. While a will dictates what you would like done with your assets and property once you pass, names guardians and appoints an executor to look over the estate, a living trust can take your financial planning a step further.
Not only does a trust benefit those you name as your beneficiaries, it also helps ease the transfer of money to your loved ones.
What is a living trust?
A living trust is a legal document that allows property and assets to directly transfer to those listed in the trust. Revocable trusts may be modified by the trust creator at any time during his or her life, while an irrevocable trust is set in stone once it is signed. Each has benefits depending on the circumstances of your situation.
What are the advantages of a trust?
One of the biggest advantages of a trust is that the document is not subject to the probate process. Unlike property listed in a last will and testament, the living trust does not have to go through legal processes or lose value. In addition, trusts have a number of benefits, including the following:
- Keep assets for children safe until they become a certain age or finish college
- Eliminate or reduce estate taxes
- Ensure assets stay with the intended beneficiary instead of being split with a marital party or fling
- Keep documents a private matter rather than becoming public record
If a beneficiary has a problem with money or drugs, the trust can be created to pay out small amounts over a period of time.
