Estate planning may often seem overwhelming when everything lies before you. The need to ensure your property and assets are taken care of after you pass is critical. If you are like many others, you want to ease the transition of your estate to the beneficiaries you wish to leave your belongings to.
In addition to the last will and testament, there are other types of policies that can help reduce the amount of red tape your estate will go through before it ends up in the hands of your friends and loved ones.
What is a revocable living trust?
A revocable living trust is an entity that holds your property and assets until you pass, then distributes ownership of your estate to your designated beneficiaries. In a revocable trust, you can update and change the assets and property you have in the trust at any time. With an irrevocable trust, however, the trust takes ownership once you transfer the property into it.
What are the benefits of a trust?
One of the most appealing advantages of a trust is that it allows the estate to avoid the probate process. Any property and assets in the estate transfer directly to your beneficiaries based on your directives. According to The Balance, other benefits of a living trust include the following:
- You can appoint someone to manage the trust should you become incapacitated without interference from the court
- Trusts are a private matter and not a matter of public record, like probate
- You can leave specific directions on how you would like your property and assets distributed
For example, if you wish to leave a large sum of money to a minor, you can specify that you would like the money used for a certain purpose, like education. You can also direct that the money is paid out in allotments each year rather than a lump sum.
Living trusts are not for everyone, but it is important to explore all your options when organizing your estate.