3 reasons to seriously consider 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.

Despite its importance, estate planning is not the easiest process. This is the downside. The bottom line, however, is that it is a blessing to be in the position of needing estate planning. It generally means that you have possessions and loved ones that you are eager to take care of even after you are gone.

An important part of the estate planning process is deciding how you want your assets to be distributed after your death. There are several options, including using a living trust. A living trust can be more complex than options like a standard will, but it also has notable benefits that make it a great option.

If you are in or approaching the estate planning process, here are three reasons to consider choosing a living trust.

Image source: Getty Images.

1. You can avoid passing the test

When you die with a will, it is subject to a court process called “probate.” During probate, a court will check that the will is valid and legally binding (ie, not forged or made under duress). On the one hand, this judicial supervision provides a certain structure and protection. On the other hand, it is not always the most pleasant process to go through.

The major problems with the testing process are time and cost. You could go through the process for months or years, and your beneficiary will not have access to the inheritance during that time. This could be a problem for people who need funds for immediate living expenses or financial obligations.

Probate costs are set by the states, so they vary quite a bit. In most cases, percentages will be set for the set property values.

2. You have more privacy with a living trust

Once the will passes probate, it becomes part of the public record. This means that almost anyone can access information about assets, their value, who receives them and other relevant information.

Having all the information about your will available can open up opportunities for conflict (especially between families) and attract financial predators. You could have family members who felt entitled to more, or an influx of “financial planners” who don’t have your best interest at hand. There are countless cases where both happen.

Because a living trust does not go through probate, it does not become part of the public record. This privacy is crucial for people who want to avoid unwanted attention, which can often do more harm than good. Whether it’s a celebrity, a high net worth individual, or the average person who just appreciates privacy, the discretion of living trusts is highly valued.

3. Living trusts offer much more flexibility

A living trust can be revocable or irrevocable. Generally, an irrevocable trust cannot be changed after it is created. A revocable trust can, however. As long as certain events haven’t happened to make the living trust irrevocable — such as a specific trigger event outlined in the trust — the person who created it (called the grantor) is free to make changes or delete it entirely .

This flexibility could come in handy if certain life events change your circumstances. You may have an additional child, get married or divorced, or decide to change when assets can be distributed. Whatever the case, small or large, you have the flexibility to adjust a living trust accordingly.

You can usually make minor changes with a simple tweak, but more significant changes might require you to rebuild the entire trust. If you decide to make changes, be prepared to potentially pay additional legal and administrative fees. You can also amend or revoke wills, but this is usually a more formal and expensive process.