Can a Living Trust Replace a Will?

Oftentimes, people will want to create a living trust that they can use as preparation for the future. A living trust is an arrangement under which one person holds the legal title of property for another person. The person who the property is being held for s called a beneficiary. If you create a living trust, you can be the trustee or you can assign a trusted and reliable friend or family member to take on that responsibility for you. This is an ideal arrangement if you are the mother of younger children who would not know how to handle a fortune should they inherit your estate suddenly.

The trust will keep them from spending money while the trustee carefully guides the investments and purchases made with the estate money. A living trust earned its title because it is created while you are alive, rather than put into practice after you pass away. Living trusts can help you to avoid probate, reduce your estate taxes, or set up long-term property management.

If you are considering a living trust, this may be a large advantage to you and an avenue worth exploring. Probate is a court-supervised process of paying debts and distributing your property to people who will inherit it. You may be able to bypass this long and drawn-out process if you are able to name a beneficiary of a living trust from the outset. While probate typically drags on for months, a living trust can be put in action at any time. Oftentimes probate can cost your heirs some of their fortune too, as 5% of the average estate is eaten up by probate fees.

Living trusts are typically less complicated than a will. You probably won’t need to hire a lawyer to be with you every step of the way, but you should certainly have an assistant on hand if you run into trouble. You will need to create a valid Declaration of Trust and you may need to consult a lawyer if you run into any hang-ups. There will be some crucial documents that you will need to fill out in order to enforce your living trust. Thankfully, the courts have made the process a lot easier in recent years because living wills have come so common. Paperwork can be tedious but the hassles are less than they were a few years ago.

A living trust does not protect property from creditors. If you are in debt, then a creditor has a right to pursue payment via the state the same as if you owned it in your own home. As the trustee or grantor, the living trust will not protect your from having to pay on any debts. For example, if you have failed to pay your mortgage and are now facing foreclosure, a living trust will not protect you from having to pay those expenses. Unlike a will, a living trust will never become a matter of public record when it is submitted to public court. This is in stark contrast to a will, which is made public during the probate process. This can be helpful for men and women who would prefer to keep the details of their fortune a secret.

To answer the question asked at the beginning of this article, you do need a will if you are creating a living trust. The trust is not a replacement for the last will and testament that every individual should create in preparation for his or her passing. This is because a will works as a backup device for property that you don’t transfer to yourself as a trustee. If you acquire property right before you die, you may fail to transfer the ownership of that property into your trust. In this case, it won’t be under the terms of the trust document, and you would need to handle that property through a will. If you don’t have a will at the time of your death, any property that hasn’t been transferred by your living trust or other probate-avoidance device will go to your closest relatives in an order that is determined by your state laws. These laws may not distribute property in the way that you would have chosen, so making sure that there is a will in place that expresses your desires is essential. Contact a local probate professional or an estate planning attorney if you want more information about living trusts or want to create a will that will stand after your passing.