Besides, legal and financial details makes most people’s head spin. However, imagine how your spouse or other loved ones will feel if you pass away and all of your assets end up in probate court? Your loved ones will have to hire attorneys and spend months or years sorting out what you’ve accumulated.
One simple document will make things easy for them. A living trust is a legal document you and your spouse create during your lifetime to hold the title of your home — and other assets. It’s like a will, except a living trust spells out what you want to have happen with your assets while you are still alive. A will, on the other hand, has no effect until you pass away.
A living trust becomes effective when signed and the property is retitled reflecting the name of the living trust. What will make your heirs happy is the living will by passes the cost and time of probate as your successor trustee can manage and distribute your property per your instructions if you are incapacitated or at your death.
The key advantages of a living trust are:
1. Probate costs and delays are avoided with a living trust. When the trustor dies, the assets are transferred by the successor trustee quickly and with minimal expense to the specified beneficiaries. You might be thinking, “I only have my house, so, the costs of probate will not be high. My estate is simple.” Even if your estate is simple, a trust will save your grieving family the time and effort to go through the process.
2. A living trust avoids possible conservatorship. You may live a long, long life, and not be, shall we say, financially savvy at the end of your years. A benefit many don’t think about occurs if the trustor becomes incompetent. With a living will in place, the alternate trustee takes over management of the trust assets without court costs and delays of appointing a conservator.
3. A living will is easy to change. Circumstances change and how your assets will need to be distributed must change. The terms in a living trust terms may be changed or revoked until the trustor dies. Of course, when you die, the terms of the trust becomes irrevocable. This prevents a surviving spouse from disinheriting a beneficiary named in the living trust.
4. Putting your home in a living trust is not a taxable event. Transferring assets into a living trust does not affect real estate taxes.
You might be thinking, “Okay, it all sounds simple and a good idea, what’s the downside?”
The fact is, there is no real downside, but there are “inconveniences.”
1. A living trust must be prepared properly, or, in other words, don’t do this yourself! Have a competent attorney prepare the living trust, appointing you as the initial trustee and beneficiary, or jointly with your spouse. But remember #2 above, an alternate or successor trustee should be named. This document is not recorded. However, your signature must be witnessed or notarized, depending on state law.
2. Sorry, paperwork is required. Your assets and major personal property, such as bank accounts, mutual funds and common stocks, must be titled into the living trust. This is critical. Just as an unloaded gun won’t protect you, a trust is no good if you fail to transfer your assets into the trust. If you forget to transfer a major asset, it remains subject to the terms of your probated will. Ugh! LW
Explore all your options in protecting your home with a living trust by working with an experienced and licensed estate planning attorney or financial advisor. If you have any questions about real estate, email Nrmaroe@gmail.com, or call me at 702-303-8243. www.probaterealestatenevada.com