When planning for the distribution of assets, you can use various estate planning tools.
One such tool is a living trust.
Living trust
According to CNBC, 67% of Americans do not have an estate plan. A living trust is a legal arrangement in which a person called the grantor transfers their assets into a trust during their lifetime. The grantor then appoints a trustee, who manages these assets on behalf of the beneficiaries named in the trust. Unlike a will, which only takes effect after the grantor’s death, a living trust is effective immediately upon its creation. There are several benefits of a living trust.
Avoiding probate
One of the primary benefits of a living trust is that it allows assets to bypass the probate process. Probate is the legal procedure through which the court validates a deceased person’s will and distributes their assets. By placing assets in a living trust, the distribution of assets happens without going through probate, which can be time-consuming and costly.
Privacy
Probate proceedings are a matter of public record, meaning anyone can access information about the deceased person’s assets and beneficiaries. Because a living trust avoids probate, it offers greater privacy for the grantor and their beneficiaries.
Flexibility and control
Unlike a will, which becomes irrevocable upon the grantor’s death, the grantor can modify or revoke a living trust during their lifetime. This flexibility allows the grantor to adapt the trust to changes in their circumstances or wishes.
Disability planning
A living trust can also provide for the management of assets in the event of the grantor’s incapacity or disability. The appointed trustee can step in to manage the trust assets according to the grantor’s instructions.
Smooth asset distribution
Upon the grantor’s death, the trustee can distribute assets to beneficiaries without the delays often associated with probate. This can help ensure a smoother transition of assets to loved ones and minimize disputes among heirs.
Anyone, especially those with high-value assets, should have an estate plan in place.
