Tragedy can interfere with life and the good intention of meaning to get around to it. The result…conflict, damage, lawsuits. There are many advantages to having a Living Trust. Privacy, control, tax avoidance.
Keeping your financial affairs private by avoiding probate is a fundamental benefit. Otherwise financial information may become public information. A Living Trust, if properly funded, avoids Probate and public disclosure of financial information. Having a Living Trust properly funded will help maintain your privacy.
Don’t like the idea of a kid getting ahold of money at age 18? Better have a Living Trust! A Living Trust allows control over distribution of your estate, your children or grandchildren, or other beneficiary beyond the age of 21. If they are disabled or drug or alcohol addicted, a Living Trust can be used to protect your Estate from being misused by a beneficiary.
Some believe having a Living Trust will avoid Probate. Wrong. Having a Living Trust only avoids Probate if you have properly transferred all your assets into the Living Trust.
A Living Trust can be funded during your lifetime or after you pass with a Pourover Will to transfer any other assets that may not have been transferred into your Living Trust during your lifetime. The better way is to properly fund your Living Trust during your life.
Other ways to avoid Probate include titling assets in joint tenancy with rights of survivorship, Payable on Death, Transfer on Death, or simply designating a beneficiary. These methods will avoid Probate and can pass assets quickly to the survivor or beneficiary. But, beware. A joint tenant can withdraw money at any time. And a surviving tenant or beneficiary does not have to share the money with anyone else you may have wished to share in this asset.
Now, let’s skip to the nitty gritty. Another great reason to have a Living Trust is to reduce or avoid Federal Estate Taxes. A Living Trust can assist in tax avoidance. In 2023 up to $12,920,000 is exempt from Federal Estate Taxes. With the right kind of Living Trust, you could shield double these amounts to pass on to your family and avoid Federal Estate Taxes.