Why not make a plan for your estate that protects your assets for your beneficiaries? With a will, your assets will have to go through the process of Probate before they can be transferred to your beneficiaries. A will simply forces your estate into Probate, a process that is both lengthy and expensive for your beneficiaries.
Probate is a court process that performs a number of functions when someone passes with only a will to transfer their estate. First, the court validate the will, and after validating the will identifies and takes inventory of the deceased person’s property. The attorneys for the probate estate have the property appraised, and then pay debts and taxes that are owed. Finally, the Court distributes the remaining property as the will directs. This is a long, expensive, and very public process that can take an emotional toll on your loved ones already mourning a loss.
So, how do you still manage to protect your assets and avoid probate? That’s simple: a living trust. A living trust is more beneficial than a will in four ways.
One: It avoids probate.
Avoid the long and expensive process? You bet! This means faster distributions of your belongings to your loved ones. Your successor trustee will be the person in charge of paying your debts and distributing your belongings instead of the courts. The best part is that your things will be distributed exactly as you intend. Additionally, probate fees are statutory and can be as high as six percent of your total estate. Those fees can be avoided with a living trust.
Two: It plans for taxes.
Federal estate and inheritance taxes can drain what money you have left behind for your loved ones. Living trusts can provide a plan that will mitigate or avoid these taxes altogether.
Three: It avoids the mess.
By setting up a living trust, you can decide who gets what, when they receive it, and how they receive it. This keeps things from getting messy for your family after you are gone. A family needs each other when experiencing a loss, and the stress of separating belongings and money left behind can drive a family apart – not to mention the costly probate process that will most likely occur without a plan.
Four: It protects your beneficiaries.
When your beneficiaries are minors, make sure you plan for them financially but also protect them. Minors are not usually responsible enough to manage their inheritance wisely. They are young and chances are, very capable making bad financial decisions. You want to know they are protected and being watched over. A living trust allows you to name a person who will be financially responsible for your beneficiary’s finances until they are capable of doing so themselves. Ensuring they are able to use the money as you have intended.
A living trust is also beneficial when it comes to the transferal of homeownership. Instead of transferring your home to your beneficiares while you are alive, you can substantially minimize income taxes on the transaction by utilizing a trust. According to the Washington Post:
” …if the parent had gone to an estate planning attorney and put the home into a living trust, the daughter could have inherited the home through the trust and would not have had to pay any federal income taxes on the sale of the home.”
So, as we move into 2020, you need to put some though into how you want your assets to go to your children or other heirs. A seemingly simple solution (a quitclaim deed) can actually be the most costly.
You’ve worked hard your entire life to make sure your family is provided for. The last thing you want to do is leave them with a mess. By having a living trust you are ensuring that your family and your assets are going to be protected no matter what. If you don’t have a living trust and are interested in looking into your options, we can help. We will take the time to get to know your family and tailor a plan that will work best for you. Give us a call at 417.581.2411 for more information.