There is a common mistake estate owners make, in subjecting total and absolute power to the will. The will is a document that clearly states how you want your estate to be passed on when you are dead, yet a lot of people hold their wealth in form of life insurances, retirement plan accounts etc. these pass unto the beneficiaries without inclusion in the will. The will only controls real estate and other property in their possession.
The will is subject to probate, a court proceeding of verifying the authenticity of the said will in compliance with New York estate laws. This process is considered to be resource consuming and there’s a chance you might lose some part of your estate if certain quotas are not met and you lack credible representation. This image of the probate has estate owners looking for a better means of bequeathing their possessions, this better alternative is a living trust.
What is a Living Trust?
A living trust is an estate plan document that created during the lifetime of an estate owner, where a distinguished individual, the trustee, is handed the responsibility for overseeing the management of the owner’s asset for the eventual beneficiary.
The popular advantage of a living trust is its ability to bypass the often resource consuming process of probate, as it allows for easy transfer of the trust creator’s assets to its designated beneficiary. A living trust offers quite a lot more benefits than just avoiding probate, our New York estate planning attorney will tell you this. This legal document also offers the following perks;
- Holds up monetary value: yes, a living trust will retain its value should there be dispute regarding the transfer of assets. In fact, this makes it more expensive and difficult to prepare compared to last will and testament.
- Functions during your lifetime: unlike a will that only comes into effect after your demise, a living trust can also function in preparing your estate in the event of incapacitation. Your trustee can make decisions in your stead should you become unfit to make them.
- Flexibility: a living trust can be adjusted to accommodate life changes at any point and there is an option to exit the trust altogether possible in a revocable trust.
- Guarantees privacy: unlike a will which is a public document, a living trust is concealed from the public, it only links an estate owner, a trustee and eventual beneficiaries. There can only be a public record if and only if an heir or a beneficiary files a lawsuit to contest the authenticity of the trust, this is less likely to happen as the estate owner is a trustee during their lifetime.
- Works effectively with a pour-over will: a trust is a legal containment for your assets, it is usually just a legal vacuum when it is prepared, it only becomes a vessel when your estate is transferred into it. Any asset(s) to be bequeathed that is not included in the trust is liable to undergo probate, usually a pour-over will is added to the living trust to cover any asset left out of the trust.
- Offers protection for separate assets, should there be a split to due to divorce or owning assets independent of each other.
There are two types of living trusts; revocable and irrevocable living trusts.
A revocable living trusts works as it name implies, it is a kind of trust that accommodates changes over time. Adjustments can be made to this kind of document without watering down on the overall credibility of it. Revocable living trusts are used to avoid probate and guarantee privacy but, they do not offer tax exemption.
An irrevocable trust on the other hand is a kind of trust where modifications cannot be made after they have been created without approval from the eventual beneficiaries. An Estate planning attorney will help you decide the best living trust best suited for your estate and he’ll be readily available to walk you through every step of the way. A living trust will serve your best interest and ensure smooth transition of inheritance to beneficiaries.