Why Should You Create a Trust?

When it comes to creating an estate plan, most people automatically think about preparing a last will and testament. Although I agree everyone should have a will, I think far more people would benefit from a trust in addition to a will. Here are a few advantages that this legal document offers.

1. Privacy

Although a will is a necessary part of any estate plan, it becomes a public record once you pass away. Therefore, anyone could find out what assets you have and who inherited them. Trusts aren’t usually made public to avoid probate, and the only people who will know your document's details are your closest loved ones.

2. Avoid Probate

When you pass away, all the assets with a named beneficiary, pass directly through the beneficiary without having to probate the will. All assets without a named beneficiary (usually your house and some minor bank accounts) must go through the probate process, by having the will admitted to probate.  A judge must authenticate the will to ensure that it was drafted and signed by the decedent. This process can take weeks, months, or even years. During this time, the assets will be withheld from the beneficiaries. By putting the assets into a trust, you can avoid the probate process so that your loved ones don’t have to wait.

3. Save Money

In most cases, creating a trust may help you save money. The probate process involves a period in court, which often results in legal expenses. If there are any conflicts regarding the details of the will, these costs may be high. However, with a trust, you can prevent probate and allow any expenses to go towards the beneficiaries instead. In some cases, items put into a trust may also avoid estate taxes after your passing.