Estate planning might sound like something that you don’t have to worry about until later in life. However, making a plan later in life, when you’re 55 or older, could be disadvantageous to you. Assets transferred on your death may be subject to estate taxes, and without a clear plan, it could affect what your beneficiaries would receive.
For Florida residents seeking to protect their assets and ensure a smooth transfer of wealth, establishing a living trust is an invaluable estate planning tool. By creating this legally binding arrangement, you can maintain control over your property during your lifetime while providing clear instructions for its management and distribution after your passing.
What is a living trust?
A living trust is a legal document that you create while you’re still alive, which lays out the terms of the trust and the assets assigned to it. In it, you designate a trustee and give directions for how you want to divide your assets among your specified beneficiaries when you die.
This might sound exactly like what a will does, but the main difference between a living trust and a will is that a living trust allows you to directly pass on your assets to your beneficiaries without going through probate – the court-supervised process of authenticating a will. Probate can be time-consuming and expensive, but a living trust ensures a smooth handover of your assets, avoiding probate.
The advantages of a living trust
Living trusts have several other advantages over wills, apart from avoiding the probate process. These advantages include:
- Privacy: With a will, the probate process and your trust becomes public record for anyone to see. But with a living trust, the details of a trust are kept confidential, protecting your family’s financial affairs.
- Succession security: If you become unable to handle your affairs due to illness or injury, a living trust can serve as an invaluable tool for incapacity planning. You can name a successor trustee, who will manage your trust according to your wishes.
- Protection for beneficiaries: With a living trust, you can establish various protections – such as spendthrift provisions – to protect assets from creditors.
While creating a living trust requires some upfront effort, the long-term benefits for you and your loved ones make it a worthwhile investment. A legal professional with estate planning experience may be able to help you draft a living trust that suits your and your beneficiaries’ needs.