One of the best ways to protect one’s properties, assets, and livelihood is through adopting a living trust. Choosing how to create a living trust can be difficult. There are different key elements to a living trust, making it more nuanced, and therefore more complicated, than a will. Still, a living trust is important for those who wish to protect their estates and heirs.
<h3>Do Your Homework</h3>
The first step should always be to understand a living trust and its benefits. The main purpose for a living trust is two-fold: Who handles the affairs of the trust should the initial holder become incapacitated and who receives the contents of the estate upon death? The former represents the vital difference between a living trust and a will. Whereas a will establishes a beneficiary, it does not help in the case of severe illness or accident that can cause one to no longer be able to handle his or her own assets.
Another area to study is that of lawyers and financial planners. Some may choose to create living trusts on their own. Others consult trusted professionals who specialize in end-of-life matters. Whatever the choice, it is important to be sure that moneys are legally protected.
<h3>Designate Trustees and Beneficiaries</h3>
The trustee is the person or persons in charge of the trust. This is likely the person establishing the trust and his or her spouse, if applicable. In some instances, an individual may name another person or entity as trustee, though this is extremely uncommon. Beneficiaries are those who accept ownership after the death of the trust’s creators. This can be anyone, from children, family members, friends, or organizations. These decisions should be made from the outset.
It must be noted that a living trust does not safeguard against disgruntled heirs. As with wills, a living trust can be battled in court if those left behind are unhappy with their inheritance.
<h3>Setting Up the Trust: Attorney vs. DIY</h3>
The choice of whether or not to hire an attorney is a personal one. Some prefer the do-it-yourself approach because it is much less expensive than hiring a professional. Online living trust kits may cost $200 or less while hiring an attorney might cost 10 times as much. However, when dealing with one’s finances, it is often preferable to have professional, legal counsel. This can ensure that the trust is completed properly, which can avoid problems for beneficiaries down the road.
Living trusts are irrevocable, which means they can be changed at any time. In most cases, it costs little or nothing to alter the trust should one’s situation change.