Many people get a living trust made in order to avoid probate, a more complex procedure. A living trust is important, and can help minimize the time and money your heirs would invest in probate. There are more reasons why a living trust is important. Glance through the following to find out the reasons:
What is a living trust?
A living trust is a written legal document, partially substituting a will, with which your estate is put into the trust. Your assets can then benefit you during your lifetime, and then get transferred to your inheritors after your death.
Reasons why a living trust is important:
You can protect property for particular inheritors
While planning our estate, we consider our spouse, children and other dear ones as our beneficiaries after our death. But often these beneficiaries are not in a position to handle the inheritance. The living trust permits you to give your money to the inheritors of your choice, while simultaneously protecting it on their behalf.
Minor children are are not allowed to own property by the government. A guardian is appointed for them who looks after this issue. This is where a living trust plays an important role. The appointed guardian pays for the kid’s expenses from the trust until they come to a certain age, after which the property is handed down to its rightful owner.
Apart from minor children, usually individuals under the age of 25 are not allowed to inherit the property, but can only use the money through the appointed guardian. This is one of the most crucial reasons for a living trust.
You can manage property upon incapacity
We often find that people are unable to help their aged parents with things like paying their bills because their property is in their names. The only option remains is to file an application at the probate court to have a guardian appointed for them. This is when all their property is brought before strangers, just because they are incapacitated.
This is where a living trust comes into the picture. A revocable living trust allows your successor trustee to take over whenever you resign or become incompetent. Your property is looked after without any interruption and supervision by the court. Revocable living trusts also get more acceptance from the entire legal community, and most states give the huge range of statutory powers as far as the management of trust property is concerned.
You can avoid probate
Your property in a revocable living trust will not go through probate after your death since the trust instrument will declare who the inheritor of the property is. Jointly-owned property, with rights of survivorship, will not go through probate, but pass automatically to the surviving joint owner. Most living trusts distribute property faster and with much less cost than is possible through probate.
Avoid a will contest
A will goes into effect only upon the death of a person, while a living trust goes into effect when the trust instrument is signed. For contesting a will, you only have to prove that the testator was either incompetent or under undue influence when the will was signed. But if you want to contest a revocable living trust, you have to prove that the individual who granted it was incompetent or under undue influence not only during the moment when the trust instrument was signed, but also when the property was transferred to the trust, when the investment decision was made, and when every single distribution was made to the owner or anyone else, which is an impossible task.
Contesting a will is very easily affordable while in case of a living trust, a substantial commitment of time and money come into the picture. A will contest takes place in the probate court, while a revocable living trust contest occurs in the civil court where filing fees and formal procedures have to be followed.