Most people have heard that living trusts offer a favorable estate planning alternative to a simple will. While a living will provides a multitude of benefits for many people, estate planning is too complex for “one size fits all” type solutions. The best option for individuals attempting to develop or modify their estate plan is to seek a consultation from an experienced Columbus estate planning lawyer. The attorney can review your assets, business, debts, family relationships, creditors, liability exposure, legacy intentions, and other relevant considerations to customize a comprehensive estate plan carefully tailored to satisfy your goals, preferences, and needs. In this two-part blog, we provide information to assist people in deciding whether a living trust makes sense based on answers to frequently asked questions.
What is a living trust?
A living trust is more than just a written document though many people do not realize that this definition falls short. The term living trust describes a legal relationship between three separate parties. The trustor is the person who creates the trust or directs another person to set up the trust. The trustor places assets like the family home, money, life insurance policies, and other real and personal property into the trust. The second party to this legal relationship is the trustee. This individual often is a close relative or a professional like a financial advisor or attorney. The trustee has a fiduciary obligation to comply with the instructions provided by the trustor, regarding managing trust assets, satisfying liabilities, disbursing trust income, and eventually winding down the trust and distributing assets. The parties designated to receive the assets of the trust are referred to as the beneficiaries.
Do my loved ones need to navigate the probate process if I have a living trust?
Probate avoidance constitutes one of the most prominent advantages associated with a living trust. The assets are transferred into the trust during the trustor’s lifetime, and the distribution of property within the trust occurs based on the instructions of the trustor. Because the probate process can have drawbacks that include significant expense, delay in the distribution of assets, and a lack of privacy regarding business and financial assets, a living trust can prevent a favorable alternative depending on the circumstances.
How do I know if I need a living trust?
While many people benefit from a living trust, an AARP study determined that the largest growth among people creating living trusts involved individuals least likely to benefit from this estate planning tool. Many services have aggressive sales people that will contact seniors directly about preparing a living trust. Because law firms are subject to ethical standards that are a component of their professional licensing, they are ethically bound to provide legal advice regarding your need for a living trust. In other words, law firms are required to advise you that a living trust is unnecessary depending on the circumstances.
Our Columbus estate planning lawyers at Dawes Legal, LLC understand that you might have specific questions about your situation, so we invite you to contact us to learn about your legal options. We invite you to call us today 614-733-9999.