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When it comes to estate planning, there are a lot of legal terms that get thrown around. Knowing what each one means can be a little confusing. Today, we’re going to dive into a living trust and the facts that you should know about it.
They Allow Your Family to Avoid Probate
If you simply make a will that states who your beneficiaries are and what assets they’re entitled to, probate is a necessity. This process basically verifies that your will is actually yours and the state keeps a watchful eye over the transfer of your assets. When your assets are put in a living trust, they can be administered by the trust adviser. This can be your financial advisor, lawyer, or someone else.
They Help Hold Money for Minors
A living trust is a great financial tool that will allow you to specify money for each of your minor children. The trust will denote how much money they are intended to have and when. Most parents who create a living trust for their children will stagger the child’s access to the funds over a number of years. For example, they may have access to half of the money in the trust when they turn 18 and the other half when they turn 25.
Keep Your Assets Private
Without a living trust, your family will have to go through the probate process to gain access to your assets. During probate, a list of your assets and their values are released to the public. As you learned above, a living trust will negate the necessity for the probate process. Therefore, the list of your assets and their values will be kept private within the family.
Can Eliminate Some Estate Taxes
Most states will charge your beneficiaries a certain percentage of the value of your assets that they receive. You can help to prevent your beneficiaries from paying so much in estate taxes by simply instituting a living will. The amount of savings is going to highly depend on the state that they’re dealing with. However, realize that some states allow up to $100,000 in estate tax savings. This goes a long way in helping to protect the value of the assets that you pass onto your beneficiaries.
Living trusts may just be another common term that you’ve heard about when people have talked about the topic of estate planning. Hopefully, you now have a better idea of what this term means and how it can benefit you. Any skilled lawyer can help you to establish a living trust.
Anica Oaks is a professional content and copywriter who graduated from the University of San Francisco. She loves dogs, the ocean, and anything outdoor-related. You can connect with Anica on Twitter @AnicaOaks.
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