Far too many people assume that a simple will is the only logical choice as the centerpiece of your estate plan. You should definitely understand the benefits that a living trust would provide before you make any final decisions. Let’s look at five reasons you may want to use a living trust.
Streamlined Estate Administration
If you draw up a will, you name an executor in the document to administer the estate after you are gone. The executor cannot act independently and follow the instructions that you leave in the document. Under North Carolina state law, the will would be admitted to probate.
This is a court-supervised proceeding. During probate, final debts are paid, and the court evaluates the will to determine its validity.
There is nothing inherently negative about this process, but it is less than ideal for the rightful inheritors. It will usually take about nine months or more to run its course, and no inheritances are distributed while it is underway.
When a living trust has been established, probate is not a factor. The trustee can administer the trust without court supervision, so the process is more streamlined.
Minimize the Risk of a Contested Estate
As we have stated, the court determines the validity of the will during probate. Because of this, interested parties can come forward to contest an estate while it is in probate. This can further complicate the process.
On the other hand, if you use a living trust, there is no built-in forum for an estate challenge. Plus, you can include a no contest clause. This would trigger the disinheritance of anyone named in the will as a beneficiary who contests the terms.
They would still be able to file a lawsuit to contest the estate if they want to go there. However, the threat of disinheritance would be a powerful disincentive. Plus, there are costs involved when you file a lawsuit.
Avoid Probate Expenses
Another drawback of probate is the fact that it is not free. The court charges a filing fee, and many people engage a probate lawyer and an accountant. There can also be appraisal and liquidation fees and miscellaneous expenses that erode the value of the estate even further.
Spendthrift Protections
Distributions to the beneficiaries that are named in a will come in lump sums all at once. If you are leaving money to someone that has a history of poor financial decisions, that can be a problem.
With a living trust, you can proactively address these concerns. First, the trust will become irrevocable after you die, so the trustee will not be able to directly access the assets. Their creditors will “step into their shoes,” and they will be in the same position.
In addition to this asset protection, you can dictate the nature of the distributions to the beneficiary or beneficiaries. For example, you can instruct the trustee to distribute a certain amount each month until the beneficiary reaches a certain age.
Schedule a Consultation Today!
A living trust can be a great choice for a wide range of people, but it is just one of the tools in the toolkit. There are different approaches that can be taken, so there is no one-size-fits-all estate plan that is right for everyone.
Personalized attention is the key to a properly constructed plan, and this is what you will receive when you choose our firm. To get started, call our Charlotte, NC estate planning office at (704) 610-4276 (option 2) or send us a message through our contact form.