There are many reasons to consider a living trust, including the fact that this will allow love ones to avoid probate once you pass on. Not only is probate time consuming, but it can cost a lot of money as well. For this reason, anything you can do to help your heirs avoid this should be considered.
Despite the known benefits of a living trust, you don’t want to move forward with this estate planning strategy just yet. Instead, you should first answer the following questions:
1. What is your current age? Generally speaking a living trust is not the right choice for middle income earners in good health under the age of 50.
Consider this: there is little to no reason for somebody in their 30’s or 40’s to be concerned about the cost of probate just yet. For the time being, a well planned will, which is typically easier to create and manage, is the better option.
2. How much money do you have? In addition to your age, your income and current assets will go a long way in determining if a living trust makes sense.
As a general rule of thumb, the more money you have the more you can save your heirs by keeping probate on the outside looking in. For instance, a 55-year-old with $20 million in the bank may realize there is no better time than now to create a living trust. On the other hand, a 35-year-old with $20,000 in the bank is not likely to consider a living trust at this point in his or her life.
3. Are you married or single? If you are married with intentions of leaving most or all of your assets to your spouse, you don’t have as much of a reason to think about the probate process early in life. Like many who are married, there is a good chance your biggest assets, such as your house, are jointly owned. For this reason, probate does not come into the equation.
The estate planning process is not always as simple as it sounds. There are questions that arise at all stages of your life, including whether or not you should create a living trust.
If you have questions about a living trust, feel free to contact us to discuss your situation and to learn more.