What is a Living Trust? A living trust is a legal document that allows you to transfer your assets to a trustee during your lifetime, who then manages the assets for the benefit of your beneficiaries after your death. The assets in a living trust are not subject to probate and can be distributed to your beneficiaries in a more timely and efficient manner.
Pros and Cons
- Pros of a Living Trust:
- Avoids Probate: One of the biggest benefits of a living trust is that it avoids the probate process, which can be time-consuming and costly.
- Privacy: A living trust is private, while a will becomes public record when it is probated.
- Control: A living trust allows you to control the distribution of your assets even after your death. You can specify how and when your beneficiaries will receive their inheritance.
- Cons of a Living Trust:
- Upfront Costs: Setting up a living trust can be more expensive than drafting a will.
- Complexity: Living trusts can be more complex to set up and maintain compared to a will.
- Limited Scope: A living trust only covers assets that have been transferred into it. Assets that are not in the trust are still subject to probate.
Cost
The cost of setting up a living trust varies, but on average, it can range from $1,000 to $3,000 or more. The cost will depend on several factors, such as the complexity of your assets, the size of your estate, and the attorney you choose.
Steps to Setting Up
- Consult with an Estate Planning Attorney: Before setting up a living trust, it’s important to consult with an experienced estate planning attorney who can help you determine if a living trust is right for you and your circumstances.
- Gather Information: Your attorney will need information about your assets, debts, beneficiaries, and wishes for the distribution of your assets after your death.
- Create the Trust Document: Your attorney will then create the trust document, which will specify the terms of the trust and the distribution of your assets after your death.
- Transfer Assets into the Trust: Once the trust document has been created, you will need to transfer your assets into the trust. This can include real estate, bank accounts, stocks, and other assets.
- Fund the Trust: You will also need to fund the trust by transferring assets into it. This process may take some time, and your attorney can help guide you through it.
- Review and Update: It’s important to regularly review and update your living trust to ensure that it accurately reflects your wishes and that your assets will be distributed according to your wishes after your death.
A living trust can offer several benefits compared to a will, such as avoiding probate and providing privacy and control. However, it can also be more expensive and complex to set up and maintain. Before deciding if a living trust is right for you, it’s important to consult with an estate planning attorney who can help guide you through the process.
