Some estate planning tools, like living trusts, can help with estate distribution and asset management. This option works by having a trustee overseeing your estate until later, when it is time for distribution.
Unlike other trusts, the terms and conditions of this option take effect even before your death. A living trust allows you to remain in control of your estate even after establishing the agreement. This setup can give you various benefits based on your circumstances, including the following:
- There is a possibility of preventing probate. Still, this can only apply if you carefully plan your estate and establish the living trust. By placing all assets in the trust, they are no longer under your name before going to your beneficiaries. If so, your estate might not need to undergo probate.
- It can reduce estate taxes. However, it might only be possible based on your estate’s size and details.
- It allows you to enforce your wishes over your estate before and after death. This trust type can impose legally binding conditions, such as your preferences during incapacity and additional distribution terms.
- It can protect your privacy. Most estate details go on public record if they undergo probate. A limited number of people can access your living trust’s information, including your legal heirs and beneficiaries.
In some situations, this option can also protect assets from creditors. Still, there is no guarantee since they remain your property and may be subject to payment collections for any debt.
Establishing a living trust without risks
Most of the time, living trusts have minimal risks because you can modify or cancel them if you wish to do so. You can take on the role of the settlor and the trustee, allowing you to oversee your assets in the trust. This option usually becomes irrevocable only if you become incapacitated or pass on. This arrangement could be ideal for you. If not, there are other appropriate options with equally beneficial features.