3 Benefits of Using a Living Trust to Pass an Inheritance to Your Family

This article is intended for educational purposes only and is not legal advice. For guidance regarding your personal situation, please contact an attorney.

No matter how much money you make or how much you can save, you may have a goal to leave behind a legacy for your loved ones, whether it’s grown children, grandchildren, or other people who are important in your life. And to that end, it helps to have a plan.

Many people are familiar with the concept of writing a will and using it to express their last wishes. Conversely, you may not be as familiar with a living trust. But it’s worth considering one for these benefits.

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1. You can control your assets and change your mind as needed

A living trust is a legal arrangement that allows you to transfer assets to other people. You can place different types of assets in a trust, whether it’s real estate, stocks or bonds.

But just because you designate a particular asset as one you want to pass on, doesn’t mean you’re stuck with that choice. The nice thing about living trusts is that they allow you to maintain control of your assets and make the necessary changes.

Let’s say you own a rental property and want to pass it on to your eldest son and his spouse. If your son then gets divorced, you can remove the ex-spouse as the beneficiary. And if she remarries, you can add her new husband.

2. You can potentially hasten the inheritance of your loved ones

When you use a will to pass on assets, it goes through a process called probate, which is when a court proves that the will is valid. Not only can testing be expensive, but in many cases the process can take months or even years.

Probate often forces people to wait to receive an inheritance. With a living trust, you can speed up this process. That’s because living trusts are not subject to probate.

3. You can protect your family’s privacy

Did you know that anyone can look up your mortgage and see how much you paid for your home? Unfortunately, wills work similarly.

When a will goes through probate, it becomes a matter of public record. This means that any nosy person can see exactly what assets their loved ones are inheriting.

With a living trust, the details of your property will remain private. So if, for example, you give a large portion of your fortune to a distant cousin and you don’t want other members of your family to know about it, they might be none the wiser.

Clearly, there are plenty of good reasons to use a living trust during estate planning. It’s worth sitting down with a lawyer and seeing what your options entail. And remember, living trusts aren’t just for the rich. You can have a modest estate and still benefit from a living trust in that you can retain control of your assets, avoid probate and ensure that the details of your financial life are kept under wraps.