Many people assume that a Living Trust is only important for the very wealthy. This is not necessarily the case. Like a Will, a Living Trust allows an individual (or married couple) to specify how assets will be divided among heirs. Trusts are very beneficial for speeding up the process of allocating assets to heirs, regardless of their value, because Trusts do not have to be processed through probate court.
Trusts can be more expensive to establish than Last Will and Testament. They require more effort to maintain and there are specific reporting requirements associated with Living Trusts. A Living Trust is not right for everyone, but for many individuals and families, the benefits of a Living Trust make establishing one a wise decision.
There are several situations in which individuals should consider establishing a Living Trust, including the following:
- You plan to make gifts to individuals that might be subject to gift taxes
- You have children from a previous marriage
- You want to prevent your heirs having to deal with probate court following your death
- You want a specific individual to have control over your assets if you become incapacitated