As seen on the WJAR NBC 10 Smart Advice Series
A traditional will when properly drafted provides for the orderly distribution of assets and designation of an executor who is granted critical administration powers under the will. However, a will does not become operative until it is filed on public record with the probate court and the probate court appoints the executor named in the will, beginning the sometimes costly, time consuming and court-supervised probate process.
Gaining Privacy in your Estate
A revocable or “living” trust is a common estate-planning tool that is used as a substitute for a will. Funding a living trust with assets during your lifetime will avoid probate. Almost any type of asset can be placed in a trust: savings accounts, stocks, bonds, real estate, life insurance, business interests, and personal property. The provisions of the living trust provisions and all assets held in the trust remain private after your death since there is no need to report to the probate court. This streamlines the process of administering and settling your estate.
Ease of Estate Administration
Living trusts are particularly advantageous for estates with substantial assets, real estate in multiple jurisdictions or complex administration matters. A living trust may contain provisions for continuing trusts to protect inheritances for your children or grandchildren from misuse or attack by creditors or divorcing spouse of beneficiaries. Married couples may use living trusts to minimize taxes by segregating assets in order to shelter federal and state exemption amounts at the first spouse’s death. Similar provisions for sheltering tax-exempt assets at death may be built into the provisions of a will, making the will lengthy and requiring probate action to activate the exemptions.
Naming Your Successor To Manage Your Assets At Death or Incapacity
With a living trust, you may name yourself as sole trustee and sole beneficiary during your lifetime, thereby retaining full control over the assets in the trust. A successor trustee would be named under the living trust to assume responsibility after you are no longer able to serve as Trustee. This ensures continuity of management of the trust assets when your pass away or become incapacitated for physical or mental health reasons. You can also keep the power to amend or revoke the living trust at any time.
Spouses and Domestic Partners
Since a living trust can hold both separate and community property, it may be a convenient estate planning vehicle for spouses and registered domestic partners to plan for the management and ultimate distribution of their assets in one document.
Wills Versus Living Trusts
|Privacy for Estate
|Automatic Continuity of Asset Management At Death
||No, but a successor appointment is available through the probate process
|Estate Tax Avoidance
||Generally cost less to create, but probate costs can be significant.
||Generally, cost more to create, but probate is avoided.
A living trust may help you transfer assets to your heirs in a way that avoids probate, maintains your privacy, and streamlines the administration of your estate. Consult your planning advisers to determine if this type of "will substitute" is appropriate for your personal situation.
Contact a Washington Trust Planning Officer at 800-582-1076 or email us at firstname.lastname@example.org for smart advice that’s focused on your unique financial goals.