There are many reasons why you may want to have a living trust. In fact, a trust may be worth having even if you don’t think that you have a lot of money. This is because they can ensure that your wishes are met if you aren’t of sound mind to make decisions for yourself. They can also make sure that the details of your estate aren’t made public.
Do I Have Sufficient Assets to Justify the Cost?
According to BNB Bank, one of the primary benefits of a living will is its ability to protect your assets from additional taxation. This benefit is only applicable if you have high-value assets subject to probate. In most cases, you will spend about $1,000 to have the trust created. However, this cost could be higher or lower depending on where it is created and how detailed you need it to be.
Are My Probate Costs Exorbitant?
When you die, your estate may have to pay a state or federal estate income tax. According to the IRS, as of 2019 the estate tax exemption is $11.18 million per person, and many states peg their estate income taxes to the federal rate. There are many strategies to minimize these taxes such as gifting assets prior to dying. Putting them in a trust can also reduce the need to pay an estate tax.
A Living Trust is Effective During Your Lifetime
The terms of a will don’t go into effect until you die. Therefore, if you were to become incapacitated, the state could decide who becomes the guardian to your child. The state could also decide who gets to manage your money or make medical decisions on your behalf. However, Everplans points out that the language in a living trust becomes effective when you first become incapacitated.
Can My Needs Be Met Any Other Way?
There are some ways that you could meet your needs without a trust. For instance, the use of a beneficiary designation would allow an asset to be transferred without the need for probate. If you have no children and few assets, a will is generally enough as the probate process is typically not that arduous.
A living trust can be an effective tool in creating an estate plan that meets your needs. Ideally, you will work with an attorney and a financial professional to determine if it is in your best interest to have one.
