A Living Trust, (more formally referred to as Revocable Living Trust or Revocable Trust) holds your assets in trust for your use and benefit during your lifetime; and it gives clear direction on how those assets will be distributed upon your death. One of the prime advantages of a Living Trust is that it can be altered or revoked by you at any time while you are still alive and competent to do so. And here is the best part: you remain in complete control of your assets while you are alive and competent.
There are several other reasons why you should consider creating a Living Trust. These include:
Living Trusts Help Avoid Probate.
Probate is the court supervised process of transferring assets from a decedent to their named beneficiaries or heirs at law. It’s required when someone dies with or without a Will, but own assets in their own name. In Massachusetts, an estate that is in probate must stay open for a year to allow creditors to file a claim against it for repayment. Additionally, probate can be expensive and may delay the distribution of needed assets to your loved ones. When you have a Living Trust, and you retitle your assets into the trust during your lifetime, probate can be avoided and the Trust terms will dictate how your assets are to be distributed to beneficiaries, often more quickly.
Living Trusts Can Ensure Assets Go to Intended Beneficiaries.
Most parents want to ensure that their assets will pass to their children. Blended families can be more problematic. While a husband and wife may love each other very much, the surviving spouse may not share the same love with your children from a prior marriage. There are often concerns about what a remarried surviving spouse will do with the entire estate after you die. For example, if the husband had two children from a previous marriage, and the wife has one of her own, the husband may be concerned his assets may not end up with his children. If everything is left to the wife by Will, she could change her Will and do with the assets as she pleases while completely disinheriting your children. A Living Trust allows you to direct your assets to your intended beneficiaries.
Living Trusts Provide Privacy.
Probate is a public process therefore Wills are publicly accessible. Nosey neighbors, disgruntled heirs, your children’s creditors or an ex-son or daughter-in-law all can see inheritances. And with the internet, prying eyes can view your Will without ever leaving home. Living Trusts can prevent all of that. Living Trusts are private; they do not get filed with the probate court. No one, except the named beneficiaries, gets to look at it unless the grantor (person who created the trust) or the Trustee (person managing it) allows it.
Living Trusts Offer More Legal Protection if Challenged.
Living Trusts are more likely to withstand legal challenges than Wills. A Will only goes into effect when a person dies. A Living Trust is different and goes into effect as soon as the trust document is signed. To contest a Will, the disgruntled heir just has to prove the decedent was either incompetent or under undue influence when the Will was signed. Contesting a Living Trust is more difficult. The disgruntled heir has to prove that the grantor was incompetent or under undue influence not only when the Living Trust was signed but also when each and every asset was transferred into the trust, when investment decisions were made, and when each distribution was made.
Living Trusts Can Cost Your Beneficiaries Less.
Since a Living Trust avoids probate, the cost of administering the estate is often significantly lower than it would be with a Will. Probate costs can skyrocket if a difficult child or someone who has been left out of the Will decides to object to its allowance during the probate proceedings. As probate is a public process in Massachusetts, all heirs at law of the decedent must receive notification of the probate proceeding. It is not uncommon for a disinherited child to purposefully torpedo the process to force a settlement from those who were intended to inherit.
Living Trusts Reduce or Eliminate Estate Taxes.
Estate taxes in Massachusetts may be owed if the decedent’s total estate is over $1 million. A person’s taxable estate includes, among other things, all retirement and financial accounts, life insurance, real estate and personal property. For married couples, a revocable Living Trust can minimize estate tax exposure when the second dies by allowing the couple to take advantage of the marital exemption.
Incorporating a Living Trust into your planning really depends on your unique situation, your values, and priorities. If any of the benefits outlined above are attractive to you, then you should discuss your options with an experienced estate planning attorney. At Generations Law Group, we help families through the maze of complex options to create a plan that works best for you and your family.
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