Of the many financial tools available to avoid family hassles, probate court, and attending costs after your death, the living trust is likely one of the best known. Deciding what’s right and determining the best way to execute your wishes is often confusing, especially since laws are continually changing, but the time-saving advantages—as well as other techniques—make it a popular option.
Here are some of the options to consider when determining what type of property transfer method is right for you and your beneficiaries:
- Property held in joint tenancy
- Revocable or living trust
Property Held in Joint Tenancy
Outside of the various types of trusts it’s worthwhile to note that there is one easy way to accomplish at least the transfer of your home to your spouse. Property held in joint tenancy leads to an effortless streamlining of the process. The same is true of bank accounts.
Revocable Living Trust
However, the revocable living trust is the technique that allows you to avoid probate for just about any property you own, from real estate and jewelry to art and heirlooms, and much more.
Functioning similarly to a will, you can use a revocable living trust to plan who inherits your property, and you can change your mind at any time as long as you live—or, as the name suggests, you can revoke it altogether. The contents of the trust are controlled by the person you named as your “successor” trustee, and the distinct advantage is that the person you named is empowered to distribute the property to inheritors without the headache of probate court. The trust is also private and avoids review and discussion in the public domain, whereas a will is a public document and subject to [a sometimes unwanted] review. There are also time-saving and cost saving advantages that come along with a revocable living trust for those you designated to inherit your assets.
Survivors who have probate court experience usually lament the time it takes to assess property, pay creditors, and manage challenges that may arise. Establishing a revocable living trust is better than depleting your financial resources, upsetting your intended goodwill, and draining your inheritors’ energy.
Know that if you are ready to think about creating a revocable living trust, you can do this without assistance. Here are some typical questions and tasks to consider:
- Should it be an individual trust or a shared trust between you and your spouse?
- What large assets do you want to place within the trust to avoid probate?
- Who inherits what property? Family, friends, charities—and who is your alternate after each choice?
- Who is your “successor trustee,” meaning who is responsible to distribute the trust’s contents to the beneficiaries?
- Who will manage the property and assets, etc. of underage beneficiaries (your children)?
- Prepare the document. You may use an online resource.
- Sign the document before a notary public.
- Transfer the property/properties into your trust., make sure you list yourself as the trustee (Don’t skip this - it’s essential).
- Store the document safely (it must be fireproof, even if at home).
- Let your successor trustee know where to access it before the time comes.
The task list is do-able, especially if you are resourceful, organized, and committed. Admittedly, most people do not understand the complexities of each question, even though they appear to be straightforward. Even the question of an individual or shared trust has implications that few can fully explore without guidance. The good news is that the document can be changed, as stated previously.
Discussions of inheritance are worthy of reflection and of a lawyer’s incisive questions. Beyond asking the “tough” questions, an experienced attorney can help guide the conversation objectively, thoughtfully and thoroughly, so that your final decisions are made with clarity and confidence.
On the same topic, making the second or alternate choice is equally important, and may be even more difficult. Rely on an attorney to make sure that you have explored various scenarios. The process leads to a well-informed decision, one which can be changed as your life and circumstances change. You are never too young to benefit from learning about these important tools.