It's difficult to think about what will happen upon your death. However, careful life planning can make things much easier for your survivors and ensure that your wishes are carried out.
While creating a will has often been recommended as an estate planning tool, creating a living trust is often a reasonable option as well. Consider some advantages and disadvantages to creating a living trust.
Advantages of a Living Trust
Both a will and a living trust are ways of documenting your inheritance instructions. Both tools allow you to specify your beneficiaries.
Living trusts can be advantageous for people who want to avoid probate or who are concerned with privacy. Wills go through probate court and are part of public record, a process that is often lengthy and costly, especially if the estate is complicated.
Conversely, a living trust allows your assets to pass to your heirs immediately upon your death or you can specify a slow distribution of assets over time. It's important to note, however, that a living trust can be challenged just as a will can. If a disgruntled family member wants to challenge being cut out of the trust, they can legally challenge the trust, creating a lengthy process.
Additionally, a living trust can benefit you while you are still alive. A living trust can be drafted in a way that allows it to substitute for powers of attorney as well. Your trustee or trustees can serve to make financial decisions for you in the event you become unable to do so, giving you the peace of mind of knowing your assets are protected whether you are dead or alive.
Disadvantages of a Living Trust
Ironically, one of the advantages can also be a disadvantage. Without a probate process, no one is monitoring your trustee. Thus, you have to make sure you fully trust your trustee. A solution would be to appoint a neutral, professional fiduciary as your trustee, or you can name co-trustees to watch out for each other.
Another disadvantage is cost. Creating a living trust is more expensive than a basic will, sometimes costing thousands for large estates. People with modest assets may decide a living trust is not worth the expense since their estate is simple and will not require a lengthy probate process upon their death.
Santa Barbara Estate Services is a compassionate and professional firm that has helped many families with planning for life's hardest situations. Whether you need advice about what estate planning tools would be best for your family, or you need a neutral, trustworthy person to serve as your executor or trustee, or you are just looking for advice about your responsibilities as trustee, Santa Barbara Estate Services can help.
— Lindsay Leonard Dorner of Santa Barbara Estate Services is a California licensed fiduciary and national certified guardian.