7 Reasons to Consider a Living Trust

A valid will is not enough to ensure the security and timely distribution of your assets in accordance with your wishes when you die.  You should consider establishing a living trust in addition to your will.

The larger the value of your estate, the greater the need to create a living trust and ensure the transfer of your significant assets into it while you are still alive.

Read on to find out more about the seven reasons to consider a living trust that will protect your estate and save your heirs time and money.

But, first…

What Is a Living Trust?

living trust is a legal, enforceable document that holds property transferred by the Grantor (aka the Trustor, which is the person or persons who created the trust) for the benefit of others (the beneficiaries) and managed by the Trustee.

It is called a “living” trust because it is established while the Grantor (Trustor) is still alive. It can be designated as either revocable or irrevocable. A revocable trust can be revoked or amended by the Grantor, who signs the trust document. 

Let’s say you have decided that a living trust is well worth the extra time and expense of setting it up (it is more complex than just making out your last will). You need professional advice in order to get it done right. Learn more here.

The primary purpose of a living trust is to manage your assets during your lifetime and to enable this property to be distributed to your beneficiaries (e.g., surviving spouse or children) easily, without having to go through probate.

What Are the Benefits of a Living Trust?

There are several reasons to have a living trust created, but it is not needed in every case. For a young married couple with few assets and no children, just having a will may be good enough. 

But, for situations where assets have been accumulated and you want to ensure timely and orderly distribution to your beneficiaries upon your death, read on.

Avoid Probate

One of the biggest reasons to have a living trust is to avoid probate.  Probate is a legal mechanism by which the decedent’s estate gets settled under the supervision of the court, or judicial authority.  Unless there is a living trust set up!

The purpose of probate is to prevent fraud after someone’s death. The court must determine the validity of the will, that all pertinent people have been notified, that all property has been identified and appraised, and that all creditors and taxes have been paid.   

Only after all that has been done will the court allow distribution of assets and closing of the estate. Until then, it is a waiting game for the beneficiaries.

Once you die, South Carolina law requires that your will is to be delivered to the Probate Court within thirty (30) days — unless you have a living trust. 

The key to avoiding probate is to ensure that the trust is “funded” before you pass away. You must transfer ownership (separate paperwork) of all your significant property, cash, stocks, and bonds to the trust — to be administered by the Trustee. 

South Carolina has a “small estate” limit of $25,000. There is simplified probate (called an out-of-court affidavit procedure)  available in South Carolina:

  • If the value of property passing by will or under the law — except for liens and encumbrances — is $25,000 or less, a probate judge may approve the affidavit
  • There is a 30-day waiting period

Decreased Estate Taxes

If you are married, the trust can provide for estate tax savings, especially if it is a joint living trust. Of course, much of the savings depend on the value of your estate at the time of your death. 

Also, any costs associated with the probate process are deducted from the estate. So are any court costs associated with contesting a will. Those costs could be avoided if a living trust is legally and properly established and funded.

Greater Privacy for Your Beneficiaries

A will is a public document and all probate proceedings associated with that will become a matter of public record (including listing your assets). A living trust is a private document and distribution of your estate upon your death is private, too.

Protects Your Interests during Your Lifetime

Once your living trust has been created and funded, if you later become incapacitated, the successor trustee you designated will be able to manage the trust assets for your benefit — without any court intervention.

This is a big benefit for people who are single or those who do not have children. The living trust arrangement ensures that you are provided for during your lifetime even if you cannot make decisions for yourself.

This is important, though. As long as it is set up as a revocable living trust, if you dispute the determination of your incapacity, you can revoke the trust and retain control yourself.

Protects Your Minor Children

Minor children are often not responsible enough to manage large sums of money themselves. The trust can be set up to disperse money to children when they get older and more mature, or even to distribute funds staggered over a range of ages.

Protects Your Adult Children

Some adult children may never be able to manage an inheritance on their own, maybe due to a substance abuse problem or just because they are frivolous with money management. The trustee can dispense funds as needed over time.

Keeps Your Assets Out of Unwanted Hands

Say you have a child who is marrying a person you do not care for. What if they were to divorce? You do not want half of your assets winding up with your child’s ex-spouse.  

These Are Great Reasons to Consider a Living Trust

At Indigo Family Law, we are experienced at creating living trusts. Our team can help you go through the complexities of getting one in place to benefit you and your heirs. 

Now that you know why you should consider a living trust, contact us today and let us help you get all your questions answered.

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Handing Down the House: 3 Tips for Putting Your House in a Trust

You want to leave your home to your children when you pass away, but all you can picture is the two of them as children fighting to win a battle of tug-of-war. What do you do?

Estate planning is the key to an amicable distribution of property. It is essential to provide the blueprint for how your assets are split and to make sure everyone is treated right.

In this article, let’s take a look at the difference between a will and a trust. Plus, we will give you three tips for putting your house in a trust.

Where There Is a Will… Will vs Trust

Should you set up a will, or a trust, or both? Let’s look at the differences.

A will gives a detailed account of what happens to your assets when you are gone. It does not affect anything while you are living. It also spells out how your family should handle decisions about your medical care, whereas a trust is something that takes effect as soon as you set it up. 

Your trust is solely about assets, like real estate and retirement accounts. And it only controls those assets that you have put into it before you die.

Another big difference is that a will must go through probate. Meaning the court must approve the will, which takes time. A trust does not go through probate, so your relatives have access to your assets faster. 

Discuss your needs with an estate attorney. They may suggest that you form both, a will and a trust, depending on your assets.

Find the Right Trustee

Find the right trustee to handle things when you are gone.

When you create a trust, you will assign your assets to beneficiaries. If you have more than one beneficiary for your home, the trustee can decide what happens if your heirs or recipients do not agree. Specify this in your trust verbiage.

There are a few things to take into consideration when you choose a trustee. If you are worried about conflict between beneficiaries, it is best to choose someone outside of the family. You can appoint joint trustees, but that is not the best idea if you fear that they will disagree.

A good rule of thumb is to pick someone you trust that has plenty of common sense. Legal knowledge is excellent too, but not mandatory for a good trustee.

Talk to Your Kids

Keep the lines of communication open when you do your retirement planning. Let all of your beneficiaries know your plans so they are not caught blindsided when you pass away.

You can use these conversations to gauge whether there will be conflict over assets. You may even be able to mend potential conflicts while you are still around.

However, remember this, no matter what people say while you are alive, they may always change their tune after you die.

Words are Important

How you word the trust documents is essential. You must be as specific as possible when you set up the trust so there is no confusion later on. 

Do your research on topics like “joint tenant with survivorship” and “transfer on death.” Talk with your attorney about the options and have the paperwork drawn up exactly as you wish. 

Putting Your House in a Trust the Right Way

Putting your house in a trust is a great decision, as long as it is done the right way. Before you begin, understand the difference between a will and a trust. Talk with your attorney about the best option for your situation.

Pick a trustee who is competent and will not fight with the beneficiaries over property ownership. Talk to your beneficiaries so that everyone is on the same page. Understand the verbiage and create trust paperwork that is detailed and specific.

Are you ready to get started on an estate plan? Contact Indigo Family Law for excellent legal advice. 

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