Trusts

This is often the main reason people use a living trust as part of their estate plan. The assets that are held by a living trust after your death can be distributed immediately by your successor trustee. Because these assets are held by your trust rather than your estate, they do not have to go through the probate process. Probate is a court-supervised process that can become complicated as well as time-consuming, and during this time the assets undergoing probate will be inaccessible to any of your beneficiaries.

Your successor trustee will also be able to step in to handle and administer the assets held by the living trust in the event of your incapacity to deal with the assets yourself. So, for example, if you suffer from an accident that leaves you unable to manage the assets in the estate, the terms of your living trust allow your successor trustee to take over, without having to apply to the courts for authority to do so.

Like a will, your living trust dictates what happens to your assets after your death. And you're not limited to distributing the property immediately to your beneficiaries. For example, if one of your beneficiaries is a minor, you can set up a trust within your living trust for that beneficiary until they reach the age of majority, or an age where you feel they'll be mature enough to handle their inheritance.

The probate process is an open process, which means it's a matter of public record. By keeping your assets in a living trust, you retain privacy for your family after your death. This means people can't search the public record to see what assets you owned at the time of death, and how they were distributed among your beneficiaries.

While setting up the trust itself isn't particularly complex, any assets you want the trust to hold will need to be properly transferred to the trust. Assets which do not require a transfer of title for example, furniture or jewelry can usually be transferred using a document that assigns ownership rights. But for those assets to which you own the title, such as real estate, a legal change of the ownership of title must be made to the title document itself.

The transfer of title process requires additional paperwork, and the payment of filing fees to register the changes with the proper authorities. And if you're dealing with multiple title changes, or more complicated assets, it may be advisable to consult with an experienced estate planning attorney to transfer title for you. These fees are all additional costs that are separate from the cost of creating the living trust itself.

Even though a living trust owns the property you transfer to it, you will continue to be taxed personally on the income generated by these assets. And while there may be some estate tax benefits of a living trust, depending on how it is drafted, the benefits are the same as could be achieved by a will.