You may be among the many people asking the common question, “Should I have a will or a trust…and what is a trust?” Understanding the terms that come with estate planning is the first step in figuring out the best option for your unique situation.
What is a Living Trust?
A living trust is a legal document that states who will manage your assets if you become incapacitated or pass away. It also specifies who will receive your assets and how they will be distributed, all while avoiding the probate process. As the trustee of your trust, you can remain in full control over your assets—meaning you can still buy, sell, or manage them as you wish. Since a living trust avoids the court, it allows your financial matters to stay private.
Types of Living Trusts
There are two main types of living trusts: revocable and irrevocable. Each comes with its own set of pros and cons.
Revocable Living Trust: This type of trust is flexible and allows you to modify it anytime, meaning you can add or remove assets and beneficiaries. With a revocable living trust, you stay in control, as you can name yourself the grantor, the trustee, and the beneficiary while you’re still alive. However, it does not provide protection from creditors or estate taxes.
Irrevocable Living Trust: In contrast, this type of trust provides asset protection from nursing homes and creditors. An irrevocable trust requires you, the grantor, to give up control of the assets. Changes to an irrevocable trust can be challenging, but it can also offer other benefits for protecting your wealth against tax reductions.
Listen to our podcast episode, “Revocable vs. Irrevocable Trusts,” for a deeper dive into these two main types of trusts.
A Living Trust vs. a Will
A living trust avoids the probate process altogether, meaning your loved ones can access their inheritance much sooner. On the other hand, a will can only go into effect after you pass, and must be approved and overlooked by the court, delaying the distribution of your assets.
Download our free e-Book, “5 Essential Estate Planning Documents Every Adult Needs,” to gain valuable information on protecting your legacy from courts, nursing homes, and taxes.
Understanding these documents can help you decide if a living trust is the right choice for your legacy. Fill out the form below to connect with our team for personalized estate planning guidance.
Contact Miller Estate and Elder Law
If you are looking into long-term care options, the experienced attorneys at Miller Estate and Elder Law are here to help guide you through the process. Contact us today at (256) 251-2137 or by filling out the form below.
