You should consider all available options when creating an estate plan. A living trust can protect your assets while you’re alive and the trust can transfer automatically to named beneficiaries upon your death or incapacitation. It’s a valuable part of estate planning to ensure your loved ones receive the property you want them to have if something happens to you.
A living trust differs from a will because it doesn’t become effective when you die. It’s effective from the moment you create it while you’re still alive.
You can also appoint yourself as the trustee so you can continue to manage it throughout your lifetime. You can determine which assets you want to be held in trust and amend the legal document when necessary. For example, you might choose a beneficiary to receive a specific property but need to change the designation if they pass away before you.
There are multiple advantages and disadvantages to creating a living trust. You should consult an experienced estate planning lawyer to determine whether a living trust is right for you. Below are the pros and cons of establishing a trust for your estate plan so you can decide whether it will satisfy your wishes.
Pros of a Living Trust
You could benefit from a living trust in multiple ways. Some of the advantages of creating one include:
- Asset protection if you’re incapacitated – If you become incapacitated and can’t make decisions for yourself, a living trust can keep your assets safe. It also protects your beneficiaries. Appointing a successor trustee allows that person to control the trust and distribute your property according to the instructions you included in the legal document.
- Avoid probate – You could avoid probate by creating a revocable living trust. Probate can be a long process. When a loved one dies, you must go through probate court for a judge to validate the will and allow for the distribution of the assets. A living trust doesn’t have to go through probate, so your successor trustee can automatically transfer the assets to your intended beneficiaries upon your death.
- Maintain privacy – Any part of an estate plan that must go through probate becomes a matter of public record. That means anyone could search online for the documents and find out what assets your relative left behind. If there’s a living trust, which does not go through probate, your named beneficiaries can keep the matter private, so no one knows which property they’re receiving.
- Prevent irresponsible spending – If you’re a parent, you want to know you can take care of your child even after you’re gone. However, many people don’t know how to manage their money responsibly. You might worry your child won’t know how to manage the high-value asset or significant amount of money you left for them. Fortunately, a trust allows you to appoint a guardian to control your child’s spending.
Cons of a Living Trust
Although a trust offers various benefits, there are some drawbacks to creating one. The most common disadvantages of a living trust include:
- Time-consuming work – If you want your assets to be distributed to your beneficiaries without going through probate, you must transfer them to your trust. It can take some time to decide which property you want to hold in trust and go through the necessary measures to transfer those items.
- No protection from creditors – If you have a revocable living trust, creditors can go after the assets to satisfy your debts after you die. That means it could take some time for your family to receive the remaining property, if any, after the creditors take what they need.
- Confusing documents – Unfortunately, if you don’t create a clear and detailed trust, there might be some confusion about the distribution of assets upon your death. If it conflicts with your will or another document in your estate plan, your beneficiaries could face a contentious court battle.
- Money. The initial costs of creating and funding a trust are more than is required to create a will. Additionally, the assets you hold in trust could be subject to estate and income taxes.
Contact Staubus and Randall
If you’re considering setting up a trust as part of your estate plan, you should contact the Dallas estate planning lawyers of Staubus and Randall today. We can review your assets and other information to determine whether a trust is right for you. Our legal team understands the importance of protecting your property and heirs when you pass away or if you become incapacitated. You can depend on us to protect your interests and create an estate plan that meets your needs.
Call Staubus and Randall at 214-691-3411 to schedule a consultation with one of our Dallas estate planning attorneys or reach out to us online.