Facts You Don’t Know About Living Trusts

Living trusts are often confused with wills, and many people don’t realize that they may be a better option for them in terms of leaving your financial assets to your family, transferring any businesses you may own, or distributing real estate. In order to determine whether a will or a trust is the better option for you, it is important to learn about both of them and what they can and cannot do. Here are some important facts to know about living trusts.

Living trusts give one person (the grantor) power to manage your assets.
Instead of wills, which name one executor to divide assets according to your wishes as well as the laws of probate court, a living trust technically leaves everything to one person, who then has the power to distribute it according to your wishes. If you have one person whom you trust above all to manage your estate – such as a spouse, child, or close friend – then a living trust often makes things easier.

Living trusts help you avoid probate court.
One of the biggest reasons why living trusts are such a good alternative to wills is because your assets do not have to go through probate court. This is the process of reviewing a will and making sure that it is legal, and it can take a very long time. In many cases, heirs will not receive their property for as long as a year or more after the will holder’s passing. With a living trust, your property can be distributed much more quickly. Probate court can also be quite expensive, but with a living trust, you’ll save money on fees.

Living trusts grant you extensive FDIC protection against your savings.
The FDIC will protect you for losses on bank accounts of up to $250,000. This works well for those with a diverse portfolio, but if you have more than that in savings, it may make sense to create a living trust. When you name a beneficiary on a living trust, you add an additional $250,000 worth of protection to that bank account, for up to five beneficiaries. This is important for making sure that your savings stay safe so your beneficiaries can rely on them when the time comes.

Living trusts keep your finances private.
One of the downsides to making a will is that it becomes publicly available through probate court. This means that anyone can request a copy of the document, which is not ideal in many cases, particularly if you think there might be unwanted public interest in your family and your financial state. A living trust allows only the beneficiaries to access the document in most cases. Only in the instance of litigation would a living trust become publicly available through court records. During a difficult time of grievance, the privacy that a living trust can provide is vital.

You may need both a living trust and a will.
If you have minor children or pets, it is important to make a will so you can make sure they are taken care of. You can specify who will be the guardian of your minor children in the event of your death in a will. It’s also easier to specify who you would like to care for your furry friends. In many cases, you may need a will to ensure that your assets get properly transferred to your grantor through the trust. To find out if this is something necessary for you, talk to a lawyer who specializes in wills and trusts.