Estate planning involves making a number of important, and often difficult decisions. While your initial estate plan may be rather simplistic, it will likely grow more complex as your estate assets increase in value and your family grows in size. Consequently, the decisions you are required to make will also become more complex. One of those decisions may involve the use of a living trust, instead of a Last Will and Testament, as the primary method of distributing your estate assets. The Hauppauge living trust lawyers offer five reasons why using a living trust to distribute your estate may be the right choice for you.
How Does a Living Trust Work?
A trust is a fiduciary legal arrangement that allows a third party, referred to as a Trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. All trusts can be broadly divided into two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Grantor’s (trust creator) Last Will and Testament. A living trust activates during the Grantor’s lifetime. Living trusts can be further sub-divided into revocable and irrevocable living trusts.
5 Reasons to Use a Living Trust
Using a living trust to distribute your estate is an option that many people choose for several reasons, including:
- Avoiding probate. Probate avoidance is a primary goal found in many estate plans because probate is costly, both in terms of the time it takes and the money spent to probate an estate. Assets held in a trust, however, bypass probate entirely. Consequently, assets held in a living trust can be distributed to your loved ones as soon after your death as you wish. This allows your intended beneficiaries access to much-needed assets immediately instead of having to wait for the conclusion of the probate process which can take months, even years, to finish.
- Staggering an inheritance. Sometimes, that is not such a great idea. Young beneficiaries, spendthrift beneficiaries, or those who have struggled with addiction in the past should not be handed a large sum of money. The risk of the inheritance being squandered is simply too great. Using a living trust to pass down an inheritance, however, provides the ability to stagger the distribution of that inheritance, thereby limiting the risk.
- Retaining control over the assets. Even though you will no longer be here, the idea of your heard-earned money being squandered or wasted likely doesn’t sit well with you. Unfortunately, however, once a gift is made in a Will it becomes the sole property of the beneficiary to do with as he/she pleases. A living trust though offers you the ability to use the trust terms to retain a certain degree of control over how the assets you gift can be used. You might include a provision that requires the assets to be used only for educational or medical expenses.
- Protecting a minor child’s inheritance. From a legal standpoint, a minor child cannot inherit directly from your estate. If you are the parent of a minor child, using a trust allows you to choose a Trustee to protect your child’s inheritance until he/she is old enough to receive direct disbursements from the trust at which point you may still decide to stagger the inheritance you leave for your child, thereby doubling the benefits of using a living trust.
- Keeping gifts private. If privacy matters to you, a living trust should be considered because the terms of a Will become a matter of public record when the Will is submitted for probate. If you prefer the terms of your estate plan to remain private, a trust is the better option as the terms of a trust do not, as a general rule, become public.
Contact Hauppauge Living Trust Lawyers
Please feel free to download our FREE estate planning worksheet. If you have additional questions or concerns regarding the use of a living trust instead of a Will to distribute your estate, contact the Hauppauge living trust lawyers at the Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.