A trust offers several advantages over a will. Privacy is one of the most important benefits of using a trust instead of a will. A trust allows your heirs to avoid probate, while wills are necessary to go through succession. Probate is the process by which a court transfers ownership of your assets to the persons named in your will.
This can involve significant costs and delays, making it unlikely that your heirs will have access to money right away. A living trust can save money by avoiding estate expenses at the time of death. In general, the disadvantages of a trust are significantly offset by the numerous advantages that are created by having a living trust. The biggest advantage is that, unlike a last will and testament, a trust allows you to avoid probate court. There are three main reasons why this is important: it saves money, it saves time, and it maintains privacy.
Trusts are frequently used in estate planning. Living trusts created during the life of the grantor facilitate the transfer of assets to heirs without the cost and publicity of the estate. Trust transfers are usually faster and more efficient than will transfers. These fiduciary transfers allow grantors to maintain privacy with respect to the nature and value of their assets.
They can be used to maintain the confidentiality of different values of assets transferred to different heirs, ensuring the privacy of family businesses and real estate held through entities not publicly identified with their owners. A living trust that is revocable comes into effect immediately (unlike a will that comes into effect on death). As a result, guardianship of trust assets is often avoided (rather than relying on a power of attorney that may or may not be recognized or may lack sufficient authority). A living revocable trust does not require probate because the trust becomes the official owner of the assets when they are transferred to it. Charitable trusts and “special needs” trusts are two types of trusts generally established during the life of their grantors. Special needs trusts are legal agreements that allow such individuals to receive financial support from the trust for private purposes without jeopardizing their eligibility for federal and state public assistance programs, such as Supplemental Security Income (SSI) and other benefits. The most important step in creating your revocable living trust is to ensure that your assets are titled in the trust's name.
Living trusts can provide savings to married couples in the form of co-living trusts, but there is usually not much difference in income and estate tax savings with a living trust. However, if assets are transferred to a trust with the intention of avoiding creditors, or in circumstances that indicate that it would be reasonable to assume that creditors would seek the assets, the trust is unlikely to isolate assets from creditor claims. You can even decide to have your will state that any assets that are outside a pre-existing trust at the time of your death will be transferred to the trust when you die. A charitable remnant trust is an irrevocable trust that provides current income to the grantor or other designated non-charitable beneficiaries and a partial tax deduction based on the valuation of the assets contributed. It should be noted that you can also stipulate in your will that you want to create a trust upon death; in this case, your estate will go through probate before the trust is established. The terms of a living trust can be changed at any time or the trust can be completely canceled, so it is called revocable. The successor would liquidate the trust and distribute its assets to the beneficiaries mentioned in the trust documents.