For many, creating a living trust is part of their estate planning. A living trust provides many benefits, but there are some drawbacks. If you are thinking of including a trust as part of your estate planning, here is what you need to know.
Why Do You Need a Living Trust?
Although there are several benefits to a living trust, one of the advantages of having one is that you can help your estate avoid probate. Probate can sometimes tie up an estate for months. As a result, family members and other heirs have to wait to receive their inheritances. Your executor also ends up tied to the estate for a longer period of time.
A living trust also helps to protect your estate from court challenges. The living trust is created while you are living and you are continually involved with it. Any challenges that are made claiming that you were incompetent at the time will be difficult to prove.
Can Your Assets Be Protected from Creditors With a Trust?
Some people mistakenly believe that creating a living trust can help keep creditors from filing claims on the estate. Unfortunately, this is not necessarily true.
Your trust is considered to be your legal entity. If you have taken the step of naming yourself as the trustee so that you can control how the assets are used while you are living, it is still considered part of your assets. Therefore, creditors can still try to take legal action against the trust.
There is a way to get around this though. If you name someone else as the trustee, you no longer have control over it, and it is not considered your asset anymore.
What Assets Can You Include in Your Trust?
Your most valuable assets should be placed in your living trust. Probate can be costly for more expensive items, so the more high-dollar items you place in the trust, the lower your estate's legal fees will be.
You can add anything of value to the trust, including your home, valuable artwork, and precious metals. If you own property outside of your home, it can also be included.
Your estate planning attorney can help determine if a living trust is the right move for your assets. If not, there are other measures available that you can explore. If it is, he or she can help you with establishing the trust and creating the necessary documents to protect your assets. For more information, contact local professionals like Lynn Jackson Shultz & Lebrun PC.