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case, then you probably have a bunch of questions about how trusts work and what sets them apart from wills. Don’t worry; we will help you out. Today we will present the top 5 essential things you should know about living trusts so that you make the right decision when it comes to distributing your estate. With that said, let’s jump right into it.
Living Trusts: Top 5 Things You Need to Know
#1 What is the difference between a living trust and a will?
The first thing that we need to clear up is the difference between a living trust and a will. While both are legal documents that contain your specific instructions for an inheritance, there are some important things that separate them. For example, a living trust gives the individual more control over their estate and privacy. The distribution of the assets and stipulations will be kept private. On the other hand, a will goes into effect after the individual passes away and the distribution is public. In addition, a living trust can be used to remove or add beneficiaries at any time.
#2 Living Trusts Can Reduce Taxes and Keep the Assets in the Family
One of the reasons why living trusts are more popular than wills is because they can be used to reduce taxes and avoid probate. You can use an estate lawyer to learn the best ways to utilize trusts. Moreover, if your child is getting engaged with someone that you don’t like, you can move the inheritance into a trust. This way, the fiancé will not have any claim to the family assets if there is a divorce.
#3 Family Matters Stay Private
A big downside of wills is that they are public documents. The exact asset distribution will be public knowledge, and more importantly, your stipulations will be visible. If you choose to create a living trust, this will not be an issue. Living trusts are private legal documents that are not accessible to the public. This is an important factor if you don’t want the world to know what assets the beneficiaries are inheriting from your estate.
#4 Your Wishes Will Be Fulfilled
A living trust will act as a guarantee that your wishes will be fulfilled. The estate will be split according to your specific instructions. If you are single, you can appoint a trustee to ensure that everything goes according to your plan. If you don’t want to ask a friend to manage the estate, you should be pleased to know that the trustee can be a company or bank.
#5 The Terms of a Living Trust are Flexible
The final thing you should know about living trusts is that their terms are flexible. You can add or remove beneficiaries whenever you want. That’s not all. You can also dictate the exact way that the assets will be distributed after your passing. However, the most important thing is that you can adapt the trust to match any circumstance. You can change the terms at any point through an amendment.
You may also like: How does probate work when there is no will? And why should you avoid leaving an estate intestate for the sake of your nearest and dearest?
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