Deciding between a Living Trust and a Will for Passing on Your Assets

Is a Living Trust Really the Best Way to Pass an Inheritance To Your Family?

Living trusts are great tools, but there could be better alternatives for simpler estates. There are many reasons why people work hard, aside from maintaining their current livelihood. For a lot of people, one of those reasons is to ensure they can leave assets behind for their loved ones after they've passed away. It's certainly one of my driving forces.

So, what exactly is a living trust?

A living trust -- which is sometimes referred to as a revocable trust -- is a legal document that allows a trustor (the person creating the trust) to place assets into a trust that's managed by a trustee for the chosen beneficiary. In many cases, the trustor also acts as the trustee, but typically designates a successor trustee in the event of death or incapacitation.

• The trustee manages the trust and then transfers the assets to the beneficiary based on the pre-determined criteria.
• The assets in a trust can vary widely, but common inclusions are cash, stocks, real estate, life insurance policies, or other valuable goods like jewelry.

The main appeals of a living trust

Arguably the most compelling reason for using a living trust is to avoid the probate process. Probate is a legal procedure used after someone's death to authenticate their will and manage the distribution of their assets to the rightful beneficiaries.

1. The legal oversight that comes with probate can be helpful, but it's often a lengthy process, stretching over months or even years in some cases.
2. Additionally, the costs linked with probate -- including lawyer fees, court costs, costs for appraising assets, and other expenses -- can add up and significantly reduce the inheritance left behind.

Privacy is another important consideration. Wills that go through probate are public records, so details about the beneficiaries and the assets they receive (including their worth) can be assessed by virtually anyone. This information is private with a living trust, preventing a situation where the public can scrutinize the details of the inheritance.

The level of privacy that comes with a living trust can be especially beneficial for high-profile individuals or people who wish to reduce the risk of disputes and conflicts over their estate.

A living trust may not be the right path for everyone

While a living trust offers flexibility and privacy advantages, it's not the best option for everyone. People with more straightforward estates might find that a conventional will handles all their needs just fine.

• The process of creating and maintaining a trust tends to be more complex than that for a will.
• Deciding if a living trust is the most effective method for you generally comes down to the complexity of your estate and your beneficiaries' needs.

Seeking advice from a legal professional can offer guidance tailored to your situation.