In estate planning, a living trust is a useful tool to protect your assets and make their distribution more efficient. When creating a living trust, a key decision is selecting which assets to include. This post will discuss the factors and benefits of this decision, helping you make informed choices that match your estate planning objectives.
A living trust, or revocable trust, is a legal setup that lets individuals (called grantors or settlors) transfer ownership of their assets to the trust while keeping control during their lifetime. It takes effect right away, and grantors can change or cancel it as long as they’re mentally capable. When the grantor passes away, the trust becomes irrevocable, and its assets go to beneficiaries without going through probate.
Key Considerations for Selecting Assets:
- Real Property:
- Real estate is often a significant asset that individuals choose to include in their living trusts. This may include residential properties, vacation homes, rental properties, and undeveloped land. Transferring real property into the trust can help avoid probate, ensuring a smoother transition of ownership to beneficiaries.
- Financial Accounts:
- Bank accounts, investment accounts, and retirement accounts can be included in a living trust. By doing this, you create a smooth way to manage and distribute financial assets without the delays and costs of probate.
- Business Interests:
- If you own a business, a living trust can be a valuable tool for succession planning. Moving ownership or shares of your business to the trust ensures a smooth transition to beneficiaries, keeping the business running without disruptions.
- Personal Property:
- Tangible personal property such as jewelry, artwork, furniture, and vehicles can be included in a living trust. Even though these items might not need probate, putting them in the trust makes the entire estate administration process simpler.
- Intellectual Property:
- Assets like patents, trademarks, and copyrights can be included in a living trust. This ensures that the rights and benefits associated with intellectual property are transferred seamlessly to the designated beneficiaries.
- Debts and Liabilities:
- While it may seem counterintuitive, it’s essential to address debts and liabilities in your living trust. This allows the trustee to manage and settle outstanding obligations, ensuring a comprehensive administration of the estate.
Advantages of Including Assets in a Living Trust:
- Probate Avoidance:
- One of the primary benefits of including assets in a living trust is the avoidance of probate. Probate takes a lot of time, money, and is public, but assets in a living trust can be distributed privately and quickly.
- Incapacity Planning:
- Living trusts offer provisions for incapacity planning, ensuring a smooth transition of management if the grantor becomes unable to handle their affairs. This can be crucial for maintaining financial stability and continuity.
- Privacy:
- Probate proceedings are a matter of public record, exposing your estate details to the public. Assets in a living trust, however, are distributed privately, providing a level of confidentiality that many individuals value.
- Flexibility and Control:
- Living trusts provide flexibility and control during the grantor’s lifetime. The terms can be adjusted, assets can be added or removed, and the trust can be revoked if circumstances change.
Picking the right assets for your living trust is a crucial part of creating a thorough estate plan. Syverson PLLC knows a lot about estate planning and can give you expert advice on choosing assets that match your specific situation and goals. Get in touch with us now to learn about the benefits of a living trust and start securing the future of your assets and loved ones.
