Trusts are powerful estate planning tools that you can use in tandem with a will. Trusts differ from wills in that your chosen trustee assumes the responsibility of distributing assets placed within the trust to your beneficiaries, rather than leaving the process to the probate court and an executor.
A living trust is one that you create during your lifetime and is typically revocable, meaning that you can change or even cancel the trust at your own discretion. The question might remain, though, as to which assets you should place in a living trust rather than in a will.
What assets are suitable for a living trust?
Many commonly-held assets are suitable for placing in a trust, such as your house and most types of financial accounts. Insurance policies, investment assets and even membership shares in an LLC are also easy to distribute to your heirs through a living trust. Keep in mind that assets such as retirement accounts, health savings accounts and vehicles are difficult or inadvisable to include in a trust.
What are the benefits of using a living trust?
A strong case for distributing your assets through a trust is that those assets will not be subject to the probate process. Probate is a lengthy and burdensome affair for your family to go through, and it can be significantly costly for your estate as well. The use of a trust also protects your family’s privacy, in contrast to the relatively public nature of probate.
Using a trust to pass down relevant assets to your beneficiaries allows you to maintain a great deal of control over your estate planning. While a trust cannot fully replace every function of a will, both documents can work well in tandem with each other for keeping your affairs in order.
