Current:Home > NewsIs a living trust right for you? Here's what to know-LoTradeCoin
Is a living trust right for you? Here's what to know
View Date:2024-12-23 16:13:35
This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.
When you work hard your entire life to accumulate wealth, you want to do what you can to pass it down to future generations in the most effective way possible. To that end, you may be considering a living trust as a means of passing on an inheritance to the people you love the most.
A living trust is a legal document that you can establish. You can transfer different assets of yours into a living trust so you're maintaining control over them while you're still alive. You can also designate beneficiaries for your living trust who will get a claim to those assets after you pass away.
The requirements for establishing a living trust can vary based on your state of residence. An attorney who deals with estate planning can walk you through the process of setting one up if it's a route you decide to take.
The benefits of a living trust
One of the primary benefits of a living trust is that it allows your loved ones to avoid probate. Probate is the process of proving a will's legitimacy in court and making sure all assets land in the right hands.
Probate might sound like a good thing in theory but can be cumbersome and lengthy, resulting in a delay in your assets being disbursed. It can also get expensive.
Wills that go through the probate process become a matter of public record and you may not want outsiders to know that you're passing on certain assets to your heirs. With a living trust, you and your loved ones can maintain more privacy.
With a living trust, you can maintain control over your assets during your lifetime. You can also alter the terms of your trust at any time should your circumstances change. Granted, you can do the same with a will, but with a living trust, you're not locked into the initial criteria you establish.
The drawbacks of a living trust
A living trust could help your beneficiaries avoid an annoying probate process down the line. But setting one up may be more costly and time-consuming than simply writing a will.
Remember, once you create a living trust, you have to go through the process of transferring assets to it. You may also be looking at higher attorney fees to set up a living trust than with a basic will.
Also, any assets you place in a living trust are still subject to applicable estate taxes. Currently, the tax code has a pretty generous estate tax exemption in place, but that rule could change for the worse over time. In fact, it could change as early as 2026 since that's when the current estate tax exemption rule is set to expire.
Is a living trust right for you?
If you're looking to pass on a lot of wealth to your heirs, you may want to consider a living trust, despite the complexities of setting one up. For a more modest inheritance, a basic will may suffice.
If you're not sure which route to take, consult an estate-planning attorney. They can help you compare your choices to see which option is optimal for you.
The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
What stocks should you add to your retirement portfolio?
Offer from the Motley Fool: The Motley Fool Stock Advisor analyst team just identified what it believes are the 10 best stocks for investors to buy now. The 10 stocks that made the cut could produce monster returns in the coming years, potentially setting you up for a more prosperous retirement.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $671,728!
*Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
veryGood! (3681)
Related
- What do nails have to say about your health? Experts answer your FAQs.
- Nina Dobrev Jokes Her New Bangs Were a Mistake While Showing Off Her Bedhead
- Secretive State Climate Talks Stir Discontent With Pennsylvania Governor
- Federal Money Begins Flowing to Lake Erie for Projects With an Eye on Future Climate Impacts
- Fighting conspiracy theories with comedy? That’s what the Onion hopes after its purchase of Infowars
- Fossil Fuel Companies Should Pay Trillions in ‘Climate Reparations,’ New Study Argues
- Save 70% On Coach Backpacks for School, Travel, Commuting, and More
- Today's Jill Martin Shares Breast Cancer Diagnosis
- New Yorkers vent their feelings over the election and the Knicks via subway tunnel sticky notes
- Save 70% On Coach Backpacks for School, Travel, Commuting, and More
Ranking
- Advocates Expect Maryland to Drive Climate Action When Trump Returns to Washington
- Chicago, HUD Settle Environmental Racism Case as Lori Lightfoot Leaves Office
- Kim Kardashian Reacts After TikToker Claims SKIMS Shapewear Saved Her Life
- Sofía Vergara and Joe Manganiello Break Up After 7 Years of Marriage
- ‘COP Fatigue’: Experts Warn That Size and Spectacle of Global Climate Summit Is Hindering Progress
- Victoria Beckham Trolls David Beckham for Slipping at Lionel Messi's Miami Presentation
- Dylan Sprouse Marries Barbara Palvin After 5 Years Together
- Q&A: The ‘Perfect, Polite Protester’ Reflects on Her Sit-in to Stop a Gas Compressor Outside Boston
Recommendation
-
Lane Kiffin puts heat on CFP bracket after Ole Miss pounds Georgia. So, who's left out?
-
Nordstrom Anniversary Sale Beauty Deals You Can't Get Anywhere Else: Charlotte Tilbury, Olaplex & More
-
invisaWear Smart Jewelry and Accessories Are Making Safety Devices Stylish
-
Reliving Every Detail of Jennifer Lopez and Ben Affleck's Double Wedding
-
‘COP Fatigue’: Experts Warn That Size and Spectacle of Global Climate Summit Is Hindering Progress
-
Reliving Every Detail of Jennifer Lopez and Ben Affleck's Double Wedding
-
Inexpensive Solar Panels Are Essential for the Energy Transition. Here’s What’s Happening With Prices Right Now
-
On the Eve of Plastics Treaty Talks, a Youth Advocate From Ghana Speaks Out: ‘We Need Urgent Action’