Protecting Your Legacy with a Living Trust
What is a living trust and why should I have one? There are many kinds of trusts and the goal of this article is to discuss some of the most popular questions about Living Trusts and why they are an important part of your Estate Plan.
What is a living trust?
A living trust is a legal document that is created for an individual (otherwise known as the grantor) during his lifetime. Just like a will, a living trust spells out exactly what your wishes are with regard to your assets, your dependents, and your heirs. The biggest difference between a living trust and a will is that a will becomes effective only after you die, and your will has entered probate which can be a costly and lengthy process. Probate postpones the distribution of your assets to your heirs. A living will bypasses probate allowing your successor trustee (similar to the executor of a will) to distribute your assets according to your wishes amongst your heirs at the time of your death, or if you are incapable of managing your finances, healthcare, and legal affairs should you become incapacitated.
Why should I make a living trust?
The biggest advantage of making a living trust is that property left through the trust does not have to go through the lengthy and costly process of the probate court. Probate is the court-supervised process of paying your debts and distributing your property to your family or the people you want to inherit it.
Without a living will, your assets will be dragged through probate court for an extended period of time, which can eat up the value of your estate. Estimated costs for probate average around 5% which go to court fees and attorney fees. If you have assets that are of significant value, a living trust is an important document to allow your assets to flow through to your beneficiaries quickly, efficiently, and as spelled out in the instructions you leave for the successor trustee.
Another advantage of having a living trust is in the event of incapacitation. A will won’t protect your financial interests, your healthcare decisions, or legal affairs while you are living. If you become unable to make decisions about any of these important matters, a living trust will ensure that you, your estate and your heirs’ best interests will be handled and taken into consideration during your lifetime.
And finally, Nevada does not use the Uniform Probate Code, which simplifies the probate process, so it may be a good idea for you to make a living trust to avoid Nevada’s complex probate process.
Do I need an attorney to prepare a living trust?
When you prepare a living trust, you want to make sure it is done properly so that all of your wishes are carried out, if fulfills all legal requirements and it carries the maximum benefits you are needing to properly protect yourself and your loved ones. Because of this, it may not be in your best interest to create a living trust on your own. Hiring an attorney to do this means that the trust will be completed correctly and that any changes to the document can be made correctly in the future. This is especially true if you have complex estate planning needs.
For example, if your plan includes generation-skipping, conditions to the beneficiaries, high dollar life insurance policies, beneficiaries with special needs or one who receives government assistance or assistance with trust funding (where your assets are transferred to the trust)
Something to consider and one of the most common questions asked about the benefits of hiring an attorney to create your living trust is the cost associated with doing so. When you hire an attorney, he can make sure that it is done properly, he can make changes for you in the future, and the biggest benefit is that he has expertise in this area. An experienced estate planning attorney has seen a variety of clients who may have special circumstances that may be similar to yours. In this case, he may be able to forecast scenarios that you may not be aware of that will help you avoid potential issues in the future. With this in mind, you may find that the cost of hiring an attorney to create your living trust will be a worthwhile investment.
If I make a living trust, do I still need a will?
The short answer is yes.
A will is an essential back-up instrument for property that you do not transfer to your trust. For example, let us say you acquire property and you die suddenly without warning. If you did not have time to or think of putting it into your trust, it will not pass on to your family under the terms you specify in your trust. But in your will, you can add a clause that names someone who will get all the property that has not been designated to one of your beneficiaries.
If you do not have a will, any property that is not transferred to your living trust will go to your closest relative as determined by state law. This may not distribute your property in accordance with your wishes, so a will can avoid this from happening.
What happens to the living trust once you die?
Irrevocable trusts can remain in place indefinitely after the trust maker dies. However, if you create a revocable trust, the assets will be distributed after death occurs and the trust will close. This can take a while if the assets have not been distributed. For example, if there is real estate or other property that must be sold, it remains in the trust until the sale has been made and the property’s ownership has been transferred. After all financial matters have been resolved, the trustee may close the trust.
What do I need to create my living trust in Nevada?
The next step is to contact Gregory S. Smith, Estate Attorney with Smith & Shapiro in Nevada to make your appointment. If you have a will or an Estate Plan, you can bring those with you as that will help in making sure all your assets can be put in the trust. If you do not have those or are unable to locate it, don’t worry. Gregory Smith will guide you through the process and help you with everything you need to create your Living Trust.