Five Good Reasons for a Living Trust.

Many people read that they need a Living Trust but don't have a clear grasp of why they need one. There are at least five good reasons that a Living Trust is a great estate planning vehicle.

1. Probate Avoidance. By creating a Living Trust and transferring your assets into the Trust, your family can avoid having to probate those assets at the time of death. This can save significant time (often in excess of a year) and expense (often as much 3% of the estate) involved in probating one's estate.

2. Estate Tax Savings. Living Trusts, when set up for spouses, can facilitate in maximizing use of the unified credit (presently $2 million per person) and the unlimited marital deduction. This can avoid estate tax on the first $4 million of a married couple's estate.

3. Controlled Distribution. A Living Trust allows the party giving the gift to control the amount and frequency of the distributions. This way, rather than a beneficiary getting a distribution all at once, the distributions can be spread out in time and amount. This can be especially desirable if there are concerns about a beneficiary's ability to handle an inheritance all at once.

4. Confidentiality. The administration of a Living Trust is not a public process. Probate, on the other hand, is generally a public court proceeding. This means that beneficaries of the probate estate can be determined by anyone. It can also mean assets of the estate can be discovered by third persons. By having assets distributed through the Living Trust, no one other than the beneficiaries and the Trustee know the details of the distribution plan.

5. Care in the Event of Disability. If you become totally incapacitated or incompetant, usually a guardianship or conservatorship will have to be established. This involves a court declaring you to be incompetant. The guardianship then falls under court oversight and can cause considerable expense. If you have a Living Trust and become incompetant, your successor trustee can take over your care without a public declaration of incompetance and without a court proceeding. This saves embarassment, inconvenience and considerable expense.

Comments

[Las Vegas Probate]

Good review of the living trust. It also helps in times of incapacity.