A living trust, also called an inter-vivos trust, is a written document in which an individual’s assets are provided as a trust for the individual’s use and benefit during their lifetime.
Question: Do my parents need a living trust? They already have a will in place.
Answer: You may believe you don’t need to create a will if you create a living trust. A living trust is, in essence, a legal document that allows you to leave your property to whomever you choose, serving the same function as a will. If you have a living trust, the property included in the trust won’t have to go through probate. However, in the case of a will, any property included in a will generally has to go through probate. Going through probate generally takes up a lot of time and costs a lot of money.
If you have a living trust, the property included in the trust won’t have to go through probate. However, in the case of a will, any property included in a will generally has to go through probate.
Having a will and a trust is crucial when it comes to protecting your loved ones. The difference between a will and a trust is when they come into effect. A will comes into effect after your death. However, a living revocable trust comes into effect immediately after it’s set up. If your parents are setting up the trust, they’ll be in total control of it. After their death or incapacitation, the person they’ve appointed as the successor trustee can take over and carry out the instructions as they’re laid out in the trust documents.
It is thus recommended you have both a will and a trust.
Why do you need a trust?
Living revocable trusts are the most widely used of all the kinds of trusts available. A living trust remains effective during your lifetime, and you can change the trust at any point in your lifetime. After the trust is set up, you can add your assets to the trust and make yourself the trustee. Doing this would enable you to do as you please with the assets during your lifetime. A trustee can also appoint a successor trustee, who can manage the trust if you become incapacitated. The successor trustee will take over after you die, which wouldn’t require getting approval from a court.
It’s vital to realize that if you have a will, your family might have to undergo a drawn-out legal process to receive the rights you specified after your will. It’s not only time-consuming but also open to the public. You might also need to hire an attorney in this case. If you leave a will, it must be submitted to the court and made public after you pass away.
If the estate left behind is small and there’s a will in place, probate can be avoided—but having a trust is the best way to avoid probate. Court approval is not needed in the case of a living trust. Privacy is maintained, and the management of the trust goes to the successor trustee immediately after the trustee’s death.
Why would you still need a will?
Although big assets should be included in a trust, a will is where you can specify to whom your smaller but significant assets go. You can also write about your funeral wishes in a will. In case you have young children, it’s very important you make a will, as you can appoint someone as their guardian in a will. If you die without specifying the guardian of your children in a will, the court system will decide who will take care of your children. The court may make a close friend, a cousin, or a sibling the guardian of your children—but the process could take a long time. Even then, their guardianship may be subjected to continuous court oversight.
Having a will and a trust in place will save the family a lot of time and money. By doing this, your parents can prevent disagreements about who gets what after they pass away.