What You Need to Know About Living Trusts

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At TriCity Lawyers, we want to help you with every part of the estate planning process so that you can have peace of mind about your future and the future of your loved ones. As part of that goal, we are here to give you information about the various estate planning options you can choose from, and one of those options is to create a living trust. In this article, we’ll go over the fundamentals of what living trusts are and how they work so that you can decide if they are right for you.

What You Need to Know About Living Trusts

What are Living Trusts? 

To put it simply, a living trust is a legal agreement that allows you to store your assets and to dictate who will inherit them when you pass away or become incapacitated. It also allows you to appoint a trustee to manage your assets for you (in the event that you become incapacitated) or disperse them to your beneficiaries (after you pass away). With a living trust, you will still be able to use your assets throughout the rest of your life.

How are Living Trusts Different from Wills? 

Another key thing to know about living trusts is what makes them different from wills. The best way to explain these differences is to break them down point by point:

  • Privacy – Wills are a matter of public record, while living trusts can be kept private.
  • Probate – A will typically requires a probate process before the assets can be distributed to the beneficiaries, while a living trust does not.
  • Cost – A will generally costs less to prepare than a living trust, but the beneficiaries of a will may face more costs due to the probate process.
  • Effective Date – A will takes effect after you die, while a living trust takes effect as soon as it is signed.
  • Trustees – Unlike wills, living trusts allow you to appoint someone to oversee and manage your assets in the event that you become incapacitated.
  • Guardianship – A will allows you to name a guardian for underage children, while a living trust does not.
  • Legal Protection – It is typically more difficult to challenge living trusts than it is to challenge wills.