If you’re considering creating a trust, you might want to know more about the pros and cons. A trust can transfer your home title and other property to your beneficiaries without going through probate, which can be expensive, time consuming, and public.
While a living trust may sound like a fancy tool for the wealthy, it is far more straightforward than a simple will. While revocable living trusts come with some pros and cons, they are the perfect estate planning tool. They are often used to avoid probate, reduce estate taxes, and are affordable.
A trust also provides a third party with the authority to manage your assets after you pass away. Using a trust allows you to maintain a higher level of privacy. And if you are incapacitated, a trust will help pay for your bills, medical care, and other essential expenses.
Also, if you believe your wishes may be challenged in court, a trust can help you and your loved ones avoid that because it’s harder to prove incompetence than with a Will alone.
Plus, if you disinherit an heir, with a trust they may not know about it because they are not privy to the notice nor have a right to see the contents of the trust. Unlike a will, a trust does not need to be presented to both your named beneficiaries and your heirs.
One drawback of a trust is the amount of paperwork needed to successfully execute it. For example, if you want to put your house (or any titled asset) into the trust, you need to transfer ownership to you as trustee of the trust. The legal fees of transferring assets to a trust can quickly add up.
Also, if you transfer property in or out of the trust, accurate written records are needed. This isn’t difficult, but it could be forgotten.
Don’t Do It Alone
Although there are some pros and cons to trusts, it may be best for you to discuss it with a lawyer or a financial or estate planner. With these considerations in mind, you’ll be on the right path toward estate planning.
Let us know if you’d like to discuss how a trust may help you.
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