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What Is a Living Trust?
As you prepare your will and other aspects of your estate planning, it’s also a good idea to consider a living trust. The two most common components of estate planning are your will, which will detail what you want to happen to your assets after you are gone, and your advance health care directive, which will detail what life-saving measures you do and don’t want to be performed. Beyond those two, living trusts can also be a great idea.
What Is a Living Trust?
A living trust is a legal document where you name a trustee or designated and trusted individual and grant them responsibility for managing your assets. One of the primary benefits of a living trust is that it will allow for a much smoother transfer and distribution of your assets after you are gone and allow the time-consuming and costly process of probate to be avoided. A living trust will allow you to appoint a trustee to have legal possession of all of the property and assets contained within the trust.
How Does a Living Trust Work?
The trustee that you name for your living trust will have a legal duty to manage the trust in the best interests of the beneficiaries of the trust. Trustees have a fiduciary duty, which means that they are bound to always act in the best interests of the beneficiary or beneficiary above their own. If you pass away, the assets contained in the trust can be distributed to the beneficiaries. However, unlike a traditional will, living trusts do not have to pass through probate and the court system in order to be distributed. This dramatically accelerates the process and makes it much less costly.
Do I Lose Control of My Assets if I Have a Living Trust?
Absolutely not! In a living trust, you can designate yourself as the initial trustee and have full control over the assets in the trust. As the one in charge of the trust, you can undo the trust, change beneficiaries or edit the trust at any time.
Can I use a living trust to protect my beneficiaries from losing their inheritances?
Yes! You can use a living trust to delay or stretch out the distribution to minor children or beneficiaries at risk of losing their inheritances to creditors, the government, divorcing spouses, or other predators. Our living trusts come standard with a special provision that allows your successor trustee to protect your beneficiaries after you are gone.
Are you curious if a living trust could be an effective way to manage your assets and estate? Schedule a consultation with our team today!
Should You Have a Will or a Living Trust?
When sorting out their legal affairs, people often have to decide whether to use a will or a trust as the primary legal instrument to pass their estate onto their loved ones. If you have not created a will or a trust yet, we would like to provide some tips to get you started on the right track.
What is the Difference?
Before we get into providing a recommendation to you, let’s focus on outlining the differences between a will and a trust.
A will is an instruction letter to the probate court that outlines one’s exact wishes for the distribution of their estate after their passing. They can be adjusted or revoked as needed, and they allow the creator to appoint a guardian for minors if necessary.
Like a will, a living trust allows one to name the recipients of their assets after their passing. The key difference here is that the creator appoints a third party to handle the distribution of assets without going to probate court. Living trusts are actively adjusted while the creator is alive, and the listed assets do not have to go through probate court after their passing.
Which Should You Choose?
The decision of whether to create a will or a trust is a significant one, and we would prefer to speak to you directly and explore the nuances of your situation before giving a concrete recommendation. Even still, we do have some tips you will want to consider as you begin the endeavor of creating your estate plan.
Typically, the initial cost of a will is cheaper than a trust. But that initial savings can cost you and your beneficiaries thousands of dollars in the long run. Unlike wills, trusts come with a host of benefits which may make them stand out as the better choice depending on your situation:
- Trusts avoid the probate process, whereas wills do not. Probate is a lengthy process that can delay the transfer of property and lead to additional paperwork. With a trust, an immediate transfer can take place.
- If you have a child or grandchild with a disability, a will could potentially cause them to lose their Social Security or Medicaid benefits. A trust will make the assets accessible without these losses.
- Trusts can safeguard beneficiaries’ assets from creditors who might be targeting them. Since they are in the name of the trust rather than the beneficiary, things like bankruptcy and business losses cannot trigger a loss of inheritances with the right trust.
- Unlike a will, a trust allows minors to receive assets without court intervention. Rather than using a guardianship to manage the inheritance, a trust allows someone you trust to handle the distribution of assets to your children. This gives you the power to immediately offer the inheritance and allow it to be used for specified purposes only or provide the inheritance after a specific age is reached.
The Importance of Estate Planning, No Matter Your Age
It’s easy to fall into the trap of thinking you don’t need an estate plan when you’re young or even middle-aged. You have a lot on your mind: finding your passion, making a career change, perhaps growing your family, investing in your education, and planning for the future. Estate planning may even be the last thing on your mind. When you’re young, it’s difficult to imagine anything bad happening to you. If it does, you believe it will happen much later down the line.
Unfortunately, this is not always the case and we have to live with the very real possibility of our own mental incapacity or death, which could occur at any time. Estate planning plays an equal part in planning for the future and protecting our loved ones when the worst happens.
Why Do I Need an Estate Plan Now?
Without an estate plan, a probate court in Ohio will decide how your assets will be divided. This is something you want to avoid for the sake of those you care about. The court process can be lengthy, and it can take a while to dispense even simple estates. Probate can also take money from your assets that should be going directly to your family instead. Anything could happen to you at any age, and when the worst occurs you don’t want them to experience additional struggles. They should be able to receive their inheritances quickly, without having to pay attorney fees. Estate plans are especially important if you have a minor child who needs to be cared for, or if you would need someone to make decisions on your behalf if you become incapacitated.
What if I Don’t Have Many Assets?
You may be thinking, I’m young and I have more than enough expenses to contend with without investing in an estate plan. I don’t even have many assets to pass down. Why is this necessary now? The hard truth is, everyone needs the three essentials of estate planning no matter how old they are or how much money they have: a will, a living will and a healthcare power of attorney. If you are in need of critical health care, for instance, your loved ones will be forced to petition a court for guardianship before they can make any decisions on your behalf. Spending a small amount of time and money now to look out for your family is well worth the cost. Unfortunately, telling someone your wishes isn’t enough to secure a will and it can’t be counted on. Drafting an estate plan is the only surefire way to get prepared and protect those you care about.
4 Myths to Avoid as You Consider the Current State of Your Estate Plan
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4 Tips to Help You Choose the Right Estate Planning Lawyer
There are many estate planning lawyers out there, but that doesn’t mean they are all the right choice for you and your family. How can you ensure the lawyer you choose is up for the challenge of handling these sensitive matters with expertise and attention to detail?
Tip #1: Choose a Lawyer with a Concentration in Estate Planning Services
There are some lawyers out there who will take any type of case that walks through the door. While this might not be an issue for small matters, it is a major issue for those looking to create an airtight estate plan with a living trust that fulfills their exact wishes and benefits their loved ones. Look for a lawyer whose niche is estate planning!
Tip #2: Let the Internet Help You
If you haven’t received any referrals from trusted sources, your best choice is to log on and view the profiles of local estate planning lawyers. Naturally, you should be looking to hire those that have an extensive background successfully representing their clients in estate planning matters. Also, check out their reviews to learn what you’ll likely experience if you hire them.
Tip #3: Meet (Virtually or Physically) for a Consultation
As you complete your research for estate planning lawyers, it is a good idea to meet before deciding to hire them. Different lawyers have different styles of working and communicating, and you’ll want to ensure your selection meets your needs and can work effectively with you throughout this sensitive and thorough process. Before you say yes, ask:
- What experience do you have in estate planning?
- Why are you recommending this particular estate plan based on my situation?
- What documents and services are included? What’s not included?
- Will my living trust have special language that protects my beneficiaries from creditors?
- Do you assist with setting up my assets to avoid probate? Is there a charge?
- Do you charge for phone calls and meetings to discuss changes to my estate plan?
- What is the fee and are there additional fees I will need to pay?
- Do you offer a money-back guarantee or payment plans?
Tip #4: Evaluate Value (not price)
Would you pay $50 for $100? Of course, because you recognize that the price you paid resulted in twice the value. Price is what you pay, Value is what you get! When it comes to living trusts, the national average cost is $1,100-1,500 USD for an individual, and $1,700-2,500 USD for a married couple. That is just the cost of the living trust by itself and does not include the other documents and services you’ll need. As with many other things in life, you get what you pay for! So, you shouldn’t expect to receive top quality service out of a lawyer offering the cheapest price. But does that mean you should spring for the most expensive lawyer you can find? Absolutely not. Instead, choose a lawyer that you believe meets your needs with payments you can afford! Spoiler Alert: We offer payment plans up to a year.
Choosing the right estate planning lawyer is clearly a big decision! We want to be the ally in your corner, looking out for your best interests every step of the way. Schedule a consultation with our team to get started today!
5 Common Mistakes When You DIY Your Estate Planning
You’ve heard of people DIY-ing their home renovations and décor, but what about DIY-ing your estate planning? Internet tools have made it possible for individuals to draft estate planning documents without the advice of an experienced estate planning attorney. However, some common mistakes can happen when they choose to do so.
Signature and Selection of Agent Issues
In Ohio, each estate planning document has its own signature or notary requirements that must be followed. Also, there are limitations on who can witness a document and who can be the agent in your power of attorney. Many individuals do not realize this when they prepare their own estate planning documents, and unfortunately, these mistakes invalidate the entire document.
Failure to List Alternates
You likely very carefully chose your executor when planning your estate. However, if they are not available when called upon down the road, the court will appoint a replacement executor. You can save your loved ones from a lot of potential headaches by simply listing one or two alternate fiduciaries or agents in your estate planning documents.
Using Forms or On-line Websites to Create Complex Estate Planning Documents
It is one thing to create a simple will or perhaps a power of attorney using fill-in forms from a website. It is a completely different ball game when it comes to preparing complex estate planning documents like trusts. Unless you have some familiarity in preparing trusts, you are bound to leave out key provisions that will prevent the trust from avoiding probate as you intended and your effort to save hundreds will cost you and your family thousands in the end.
Not Funding the Trust
Many estate planning DIY-ers do not realize that you actually have to fund a trust after drafting it up, which only happens when you put the assets you want to be controlled by the trust in the name of the trust or when you designate the trust as the beneficiary. Failure to do this will cause your assets to go through probate, and the trust will have virtually no effect.
Not Addressing Your Unique Situations
Most families have at least one sort of unique situation to address when creating their estate plan. For example, some individuals have outstanding debt and may want to leave as little money possible to their creditors. Other individuals may want to account for the fact that some of their beneficiaries are not very financially responsible. It’s easy to work through nuanced situations like these with an experienced attorney, but cookie-cutter web forms may leave you scratching your head.
As you can see, there’s a lot that can go wrong when you DIY your estate planning. Would you rather have an ally in your corner looking out for your best interests every step of the way? Schedule a consultation with our team today!