Now, you might say “I do not have a large estate and it is too expensive and complicated anyway! I do not need a trust!”. Well, there are a few good reasons as to why you need a living trust. A trust is a written document and separate entity into which you transfer the ownership of your assets. You act as the manager of that trust and you name the beneficiaries that will take up your assets in the event of your passing. The top reasons to create a living trust are as follows:
- It saves money. You may be wondering how it can save you money if it costs more to have a trust prepared than a will prepared, but in the long run, a trust is much cheaper. It avoids the probate process upon your death. If you die with a will it must be presented to the probate court, where the court will supervise the distribution of your estate. All of this costs anywhere from 5 to 10 percent of the value of your estate. So, the trust may cost more at the beginning than a will, but it will eliminate the probate process.
- It helps you retain control. You do not have to give it up or put it in the hands of a third party. You have the power and authority to buy and sell, or reinvest your assets.
- You eliminate the time that it takes to settle your estate. If you died without a trust your estate would go through probate, which on average takes one to two years. A trust can be settled in as little as one to two weeks.
- The trust remains private. If your estate were to go through probate, all of your records are made public. Anyone can access them. The trust remains a private family document and is not required to be filed publicly.
- There are no government forms to file. The IRS calls this kind of trust a “grantor” trust, meaning you do not have to file a separate tax return or separate ID number. It just reports all of the income on your 1040 tax return and uses your social security as the ID number so there are no additional forms to file.
- The estate tax. You may remove or eliminate the estate tax altogether or at least reduce it by creating a living trust.
- The trust can act as a prenuptial agreement. You can put your property into a trust before you marry if you are worried that you may lose it in a divorce. It will then become your sole and separate property account and your spouse may not claim it.
Contact an Estate Planning Attorney
You can rely on our diligence and experience to create a trust you are proud of. We will also ensure that everything gets transferred to your loved ones or rightful heirs after you die. We can help you create a trust and answer any questions you may have. A lawyer, like a skilled revocable living trust lawyer in Philadelphia PA, can offer advice and help on this topic.
Thank you to Klenk Law for providing their insight and authoring this piece on creating a revocable living trust.