Because of all the important benefits they provide, many people create living trusts as part of their incapacity and estate planning. While living trusts provide significant advantages, many are surprised that a living trust will not provide all the protections they traditionally associate with trust creation. Living trusts are just a small part of a comprehensive estate plan, so those who are considering trusts should make sure they get proper advice to make sure their plans meet their needs.
Parman & Easterday can provide extensive assistance with trust creation and can help those thinking about creating trusts to evaluate the living trust benefits for themselves.
We also provide details on alternatives to living trusts, as well as other estate planning tools worth considering. To find out more about how our estate planning attorneys can help you with the use of trusts, give us a call today at (405) 703-9987 or (913) 385-9400.
Understanding Living Trust Benefits
Some of the many benefits living trusts provide include:
- Avoiding assets transferring through probate.
If assets are held in a living trust, they transfer through trust administration instead of probate. Trust administration doesn’t involve courts and can be much faster than probate. If you want to make sure beneficiaries receive their inheritances quickly, either so they can begin managing them right away or if they are financially dependent upon them, living trusts are the best answer.
- Providing protection of assets in case of incapacity.
Although most people who create trusts (trust “settlors”) serve as trustees of their own living trusts, the trust creation process requires them to name successor trustees, who can care for and manage their trust assets should something happen to them. This avoids the need for guardianship proceedings as an appropriate person can begin managing the assets without any period of uncertainty resulting from the trust settlor’s incapacity.
- Reducing the chances of your wishes being contested.
The transfer of assets through a will leaves the door open for a will contest. If successful, the will contest can result in your will being invalidated. This means intestacy laws, and not your preferences, dictate what happens to property.
Trusts can be contested too; however, there is a much smaller chance of a successful contest because the settlor is involved with the trust over the course of his or her life. It is harder to argue you did not mean to name the beneficiaries you did or provide them with the gifts you gave them if you have made these gifts through a trust which you managed and reviewed regularly over the course of your lifetime.
To take advantage of these and other benefits of a living trust, you need to make sure you follow the laws for trust creation. Your trust must be properly created and managed for you to receive the benefits and protections for which you created the trust.
What Living Trusts Won’t Do
While there are many benefits which make trust creation worthwhile, you also need to consider what living trusts do not do. For example, any assets which a living trust owns are still considered to belong to the trust creator. They will be counted as resources, which could result in disqualification for means-tested Medicaid benefits. They will also be counted as part of an estate after death, which means they will still be used when valuing assets to determine if estate tax is owed.
This is a small sampling of the limitations associated with living trusts. An estate planning attorney can help you to determine how to incorporate living trusts into your plans and can work with you to develop additional estate planning documents to provide even more protection.
Getting Help from an Estate Planning Lawyer
Parman & Easterday has provided assistance to many clients in creating living trusts and other estate planning tools, such as irrevocable trusts for asset protection. To find out more about living trust benefits and other useful estate planning tools, join us for a free seminar . You can also call us today at (405) 703-9987 or (913) 385-9400 or contact us online to find out more about how a living trust can benefit you.