Your estate plan should grow right alongside you, your estate, and your family. Although you will probably initially rely on a Last Will and Testament to distribute your estate assets after you are gone, you +may consider changing that at some point down the road and using a living trust instead. The Lincolnshire living trust attorneys at Hedeker Law, Ltd. explain why you might ultimately decide to use a living trust instead of a Will to distribute your estate assets.
Is Your Will Sufficient?
Like most people, you probably started your estate plan by executing a Last Will and Testament. That Will likely continues to serve as your primary estate planning document. Initially, a Will may be all you really need to ensure that you do not leave behind an intestate estate if something happens to you; however, that simple Will may not be sufficient to properly handle the distribution of your assets as both your assets and your family grow. As such, you may eventually contemplate the use of a living trust instead of a Will as the primary distribution method for your estate assets. While you should always consult with an experienced estate planning attorney when making important decisions regarding your estate plan, you may also find it beneficial to know why a living trust might be a better option.
How Does a Living Trust Work?
A trust is a fiduciary legal arrangement that allows a third party, referred to as a Trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries. All trusts can be broadly divided into two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s (trust creator) Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust activates during the Settlor’s lifetime. Living trusts can be further sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time. An irrevocable living trust, however, cannot be modified or revoked by the Settlor at any time nor for any reason unless a court grants the right to revoke or modify the trust.
Why Might a Living Trust Be a Better Option to Distribute My Estate Assets?
There are several reasons why you might come to the conclusion that using a living trust to distribute your estate is a better option than using a Will, including:
- Probate avoidance – assets held in a trust bypass probate, meaning they can be distributed as soon after your death as you wish. This allows your intended beneficiaries access to much-needed assets immediately instead of having to wait for the conclusion of the probate process.
- Staggering an inheritance – when a gift is made in a Will it is made as one lumps sum. For young beneficiaries, or those who may not be very responsible with money matters, the ability to stagger the distribution of an inheritance is a valuable option.
- Continued control – once a gift is made in a Will it becomes the sole property of the beneficiary to do with as he/she pleases. With a trust, you have the ability to use the trust terms to retain a certain degree of control over how the assets you gift can be used.
- Protecting a minor child’s inheritance – a minor child cannot inherit directly from your estate. Therefore, if you are the parent of a minor child, using a trust allows you to choose a Trustee to protect your child’s inheritance until he/she reaches the age of majority and can legally receive the assets outright.
- Privacy – the terms of a Will become a matter of public record when the Will is submitted for probate. If you prefer the terms of your estate plan to remain private, a trust is the better option as the terms of a trust do not, as a general rule, become public.
Contact Lincolnshire Living Trust Attorneys
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about using a living trust to distribute your estate assets, contact an experienced Lincolnshire living trust attorney at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.