The most commonly used document for distributing an estate remains a Last Will and Testament; however, it is not the only option. In fact, as their estate grows over the years, many people choose to switch to using a living trust to distribute their estate assets. To help you better understand why, a Murfreesboro living trust attorney at Bennett, Michael & Hornsby discusses the advantages of using a living trust to distribute your estate.
How Does a Will Work?
A Last Will and Testament is a legal document that communicates a person’s final wishes regarding estate assets. In your Will you can make both specific and general gifts. For example, you might make specific gifts of your vehicle and $10,000 in cash to a designated beneficiary while making a general gift of 25 percent of your entire estate to another beneficiary.
What Is a Trust?
At its most basic, a trust is a fiduciary relationship whereby title to property or other assets is held by one party for the benefit of another. A trust is created by a Settlor, also referred to as a Grantor, Trustor, or Maker who transfers property to a Trustee. The Trustee holds that property for the benefit of the beneficiaries named in the trust agreement which can be individuals, organizations, or even pets. When used to distribute your estate assets, the trust terms dictate which estate assets are to be gifted to which beneficiaries.
Why Might I Want to Use a Living Trust to Distribute My Assets?
Although a Last Will and Testament will probably be the first estate planning document you create, it will not likely be the last. On the contrary, you may choose to add a number of additional inter-related documents to your estate plan as the plan grows over the years. One of the first things people frequently do when expanding their estate plan is to create a living trust to distribute their estate plan instead of relying on their Will. Among the advantages to using a living trust are:
- Probate avoidance – assets that are gifted in your Will are considered “probate” assets. As such, those assets must all go through the probate process, meaning they cannot be transferred to the intended beneficiaries until the end of the process. The result is that it could take months (even years) for your loved ones to receive their intended gifts. Trust assets, on the other hand, are “non-probate” assets, meaning they bypass the probate process altogether. Trust assets, therefore, can be distributed immediately after your death.
- Incapacity planning – the same living trust that you use to direct the distribution of your estate assets after you are gone can also be used to determine what happens to your assets in the event you become incapacitated – something your Will cannot accomplish.
- Protecting a minor child’s inheritance – your minor child cannot inherit assets directly from your estate, meaning he/she cannot receive gifts made in your Will. An adult must guard and manage the inheritance of a minor child until he/she reached the age of majority. By using a living trust to pass down that inheritance, you get to choose who that person will be through your appointment of a Trustee.
- Staggering an inheritance – even if your children are adults, you may still be hesitant to pass down a significant lump sum inheritance to one or more of them. If that’s the case, a living trust is a better choice than a Will because the terms of a trust can provide for assets to be distributed in numerous smaller distributions over a longer period of time.
- Retaining control – when you make gifts in your Will, you basically lose the ability to control how the gift is used. With a living trust, however, you can include terms that help you to maintain some control over the trust assets. For example, you might require the assets to be used for educational expenses only.
- Privacy – if your Will is submitted to probate, the terms of that Will become a matter of public record. If you prefer to keep the terms of your estate plan private, a living trust is a better option because the terms of a trust agreement generally remain private.
Contact a Murfreesboro Living Trust Attorney
If you have additional questions or concerns regarding the use of a living trust to distribute your assets, consult with an experienced Murfreesboro living trust attorney at Bennett, Michael & Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your appointment.