Many people have misconceptions about using living trusts in their estate planning. Among these are that you only need a living trust if you have a substantial estate and that you don’t need a living trust unless you’re married. In order to fully understand wills and trusts, it is best to consult with a knowledgeable estate planning attorney to discuss such matters. In the meantime, here is some information about living trusts that should be helpful.
What is a living trust?
A living trust is a document that permits you to legally put your assets in the name of your beneficiaries either during your lifetime or after you die, depending on the type of living trust you establish. Part of creating a trust is designating a trustee who will manage the assets in your trust and their distribution. You, as the person creating the trust, become known as the grantor. In some cases, you can be the trustee of your own trust.
There are two major types of living trusts: revocable and irrevocable. The difference between the two is easily deciphered: a revocable trust can be altered during your lifetime, while an irrevocable trust cannot.
What are the advantages of having a living trust if you’re single?
There are several benefits to creating a revocable living trust, including:
Whether you are married or single, transferring your assets to a revocable trust during your lifetime takes those assets out of your ownership at the time of your death. This means they will not be subject to probate — the process through which your will is validated by the court. Probate is often a costly, time-consuming process, so by establishing the trust you keep your beneficiaries from having to deal with its hassles and expense.
Though you will probably still need a Last Will and Testament for other reasons, by creating a revocable trust you will protect the bulk of your assets from the high fees associated with probate, from excessive taxation, and from certain creditors. Though some state legislation, like the Uniform Probate Code in Massachusetts, simplifies the probate process for those with low assets (under $25,000 aside from ownership of a home), most people of means will benefit significantly from creating a living trust.
You may not be aware that wills are public documents that may be viewed by anyone, whereas living trusts are private documents. If you don’t want your financial matters generally known, creating a trust will keep your private information away from prying eyes. This action will also help to prevent your will from being contested.
Ensuring that Your Wishes Are Followed
Your living trust also benefits you in another way. While a Last Will and Testament goes into effect upon your death, a trust can arrange for your finances to be managed during your lifetime if you become physically or mentally incapacitated. Though unpleasant to contemplate, the likelihood of becoming incapacitated increases as we age, especially as lifespans increase.
Unfortunately, a number of us will become disabled unexpectedly due to catastrophic injury or disease, perhaps even at a young age. Having a living trust can provide for someone you trust to take over managing your affairs and seeing that your previously determined wishes are followed. Even if your disability is temporary, it will be a blessing to know that you have arranged for someone to take over in your absence.
Not All Single Individuals Need a Living Trust
In some cases, a trust may actually be more necessary if you are single and have amassed substantial wealth, since your assets are not jointly owned with a spouse. If you have only moderate assets, however, you may not need a trust. The less substantial your accumulated wealth and the simpler your inheritance arrangements, the more likely you are to be able to forego the time and money spent creating a trust.
ABOUT THE AUTHOR
Michelle is a compassionate professional who provides peace of mind to her clients. She is a Certified Elder Law Attorney by the National Elder Law Foundation which means she is uniquely qualified to serve the interests of older, maturing populations by having met comprehensive and strict requirements. Michelle is one of only 24 CELAs in the state of Massachusetts. To learn more about this special designation, please visit www.nelf.org. Michelle is also licensed in the state of Connecticut.