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What Is a Living Trust?

How are your assets currently organized? Are they organized at all? If you’re unsure how to prepare them, a living trust may offer the organization you need. Let’s look at how a living trust compares to a will and how it protects your assets from the probate process.

Wills vs. Living Trusts

You may be more familiar with the concept of wills than that of living trusts. While the two are similar, they do have a few key differences:

  • Wills: Wills only take effect after you die. They cannot control what happens to you or your assets if you’re still alive, but you become incapacitated. Also, the existence of a will does not prevent your assets from entering the probate process after you die.
  • Living Trusts: Living trusts can take effect while you’re still alive, particularly if you become incapacitated. They outline how you want to be cared for and how you want your assets distributed. They also make it easier to avoid probate than wills do.

Why Choose a Living Trust?

A living trust is a great way to protect your assets because you transfer them to the trust while you’re still alive. And you still maintain full control over those assets. Many living trusts are revocable living trusts, which means you can change them at any time during your lifetime. You may serve as your own trustee, the person who manages your estate, or you can have someone else do it.

Who Can You Choose as a Trustee?

You can choose yourself or your spouse to be your trustee. However, you could also choose a corporate trustee, which is a trust company or bank that oversees your living trust. If you choose this trustee option, you receive the support of financial advisors, trust officers, and other professionals who help you put your living trust into action effectively.

If you choose yourself as your trustee, but you want to maintain control over the trust if you’re incapacitated or pass away, it’s best to appoint a successor trustee. A successor trustee steps in to oversee your assets and enact your wishes if you die or become incapacitated. This successor trustee could be a single person, such as a spouse or child, or a corporate trustee.

How Living Trusts Help You Avoid Probate

If you don’t have a living trust, your assets become subject to probate once you pass away or become incapacitated. Probate is the public legal process where the court makes sure that your assets are properly handled and distributed. This process is expensive, and it often takes a considerable amount of time, up to two years in some cases.

A living trust avoids the probate process by letting you and your trustees keep control of your assets. Since you maintain control over them, the court never has to divide everything up publicly. You keep your privacy and save yourself many legal costs.

Set Up Your Living Trust With Inkwell

If you’re ready to set up your living trust, reach out to us today. We work with you throughout the entire process so your assets go to the right people and places.