Estate Planning Lawyer
Most people are familiar with the term living trust, but it is still one of the most misunderstood forms of estate planning tools. The myths that surround trusts are spread so commonly that a lot of people who are considering estate planning choose to skip over the idea of creating a trust because they believe it’s not for them.
What is a Living Trust?
A living trust is an estate planning document that allows the writer of the trust (also known as the grantor) to maintain control over the property until his or her death. After, the trust will be handed over the the named successor who will be responsible for distributing the assets and managing the trust according to the grantor’s wishes.
The benefits of a trust include:
- You can avoid the probate process
- Your beneficiaries can recieve their assets quickly
- You save on taxes
- It remains a private affair
- It can be changed at anytime, an irrevocable trust cannot
Myths About Living Trusts
Myth: A living trust is only for rich people.
Truth: This is one of the most widely believed myths regarding living trusts, and commonly stated in movies and tv shows. It is not true. Although many rich people do set up a trust, it is not an option only for them. Many people who make average incomes will also find trusts to beneficial.
Myth: Only a beneficiary of a trust benefits.
Truth: Creators of a trust do want to ensure their assets go to their beneficiaries as fast as possible, but that is not the only benefit. By having a living trust, your affairs can be better manages should you become incapacitated.
Myth: Once your assets are in the trust, you cannot touch them.
Truth: In a revocable living trust you can access some or all of your financial and tangible assets at anytime. If you’re using the trust for your own benefit, it can be set up so that you can access everything until you die. You can also choose assets to be inaccessible to you so that your beneficiaries are guaranteed to get something.
Myth: A living trust always avoids probate.
Truth: In general, the assets held in a trust will avoid probate. However, some states will require a probate proceeding for certain assets such as real estate. By and large, your trust will likely not have to go through probate. Anything not included in the trust will need to go through the probate process which is why you should make sure your trust is funded with every single asset you would like to pass on.
Myth: A trust is expensive.
Truth: A trust is more expensive than a legal will, but the financial savings that can result often exceed the upfront legal costs. Without a trust you or your beneficiaries may have to pay numerous taxes, probate fees, and legal fees associated with probate.