10 Things You Should Know About Living Trusts
You’re just starting the estate planning process. While you’re unfamiliar with most of the terms surrounding estate planning, one thing you’ve heard a lot about is a living trust. Now, you’re trying to understand why people prefer living trusts. To begin, find out 10 things you should know about living trusts.
Entz Burton & Associates, estate planning lawyers, have assisted Oklahoma families and family-owned businesses with estate planning and business law for over 30 years. Reach out to us today to schedule your free consultation and learn if you need a living trust.
- A Living Trust Is a Legal Document – You’ll first need to know the definition of a living trust. A living trust is a legal document that you, the grantor or settlor, creates during your lifetime. A designated person, who is also known as a trustee, manages the assets in the trust for the beneficiary, who will receive the assets when the settlor passes away. There are many advantages of using a living trust in your estate plan. In an ideal scenario, you’ll have a will as well as a living trust.
- Living Trusts Help You Avoid Probate – With a living trust, you can avoid probate, which is a costly and time-consuming process that the state oversees. Your loved ones could be caught up in court for months or years at a time depending on the complexity of the estate. Your estate could also be charged more taxes than necessary, meaning your loved ones won’t get as much as they deserve.
- They Help You Fulfill Your Wishes – If you don’t have an estate plan, the state’s intestacy statutes decide what happens to your assets. People you don’t want receiving your property could get it. Your loved ones could be torn apart and experience even further grief and anguish. With a living trust, you can say exactly what you want to happen with your assets and property after you pass away and ensure your wishes are fulfilled.
- They Are Private – Probate is a public process, which means that anybody with a valid claim can try to claim your assets as their own. But if you have a living trust in place, then your financial affairs will be kept as private as possible. The public won’t have to know about your private affairs.
- You Can Reduce Taxes – If you’re using a living trust, then you could avoid or reduce estate, gift, and income taxes. Your estate could save thousands, or perhaps even hundreds of thousands of dollars.
- They Can Be Revocable or Irrevocable – A living trust can either be revocable or irrevocable. A revocable living trust is one that you can change at any time while you’re still alive. Most people opt for a revocable living trust just in case their situation changes. For example, a beneficiary may pass away, and they need to add another beneficiary instead. An irrevocable trust could be useful in some specific cases.
- A Trust Can Provide Protection- Some people may use an irrevocable trust if they work in a field where they are subject to lawsuits, like the law or medicine, or if they have creditors coming after them, since it can provide protection. Setting up a trust to provide protections from third-parties is not something you want to leave to a DIY trust form that caters to a basic estate plane. Instead, you should consult a professional that can cater to your specific situation and needs.
- You Don’t Need a High Net Worth to Use One – There is a misconception that you need to have a high net worth to use a living trust. This is false. Anybody can use a living trust during the estate planning process. They aren’t just for wealthy people.
- They Cost Money – You will pay to set up your living trust. What you will pay will depend on the professional you hire to help you create it as well as the complexity of your estate. Spending the money on a trust now can create significant savings for you and you beneficiaries in the future.
- It Should Be Created With the Help of a Professional – There are websites that advertise DIY living trusts. But you should never do estate planning on your own – especially if you’re creating a living trust. The risks are just too high. If you mess up, you may not know, and then you won’t be able to fix your error after you pass away. To make sure that your living trust is exactly like you want it, you need to contact a professional to help you. The investment and peace of mind will be well worth it.
Contact Entz Burton & Associates
If you need help coming up with a living trust for your estate plan, then get in touch with Entz Burton & Associates today for your free consultation. Call us at 405-773-9800 or 800-633-7230, or contact us on our website. We look forward to hearing from you and helping you with all your estate planning needs.
Attorney J. Michael Entz at Entz Burton & Associates is an experience lawyer in estate planning law, business formation and asset protection serving the families in Oklahoma City and Weatherford office.
