If you do not yet have a will or living trust, you are not alone, as 6 in 10 Americans have yet to create these estate planning documents, states a survey produced by Caring.com. One of the reasons why you may not have a living trust is that compared with a will, you may not need one unless you possess a sizable estate.
A living trust is an estate planning vehicle that takes ownership of your belongings while you are still alive. You can put anything of value into your living trust, including your bank and savings accounts, real estate you own, fine art and jewelry, vehicles and even virtual belongings.
The benefits of living trusts
Compared with other estate planning methods, there are many benefits of creating a living trust. The primary benefit is that a living trust saves money and time during probate. When you create a living trust, you name a trustee who will handle your end-of-life affairs. Your trustee can immediately take care of these tasks upon your death instead of waiting on a probate judge.
A living trust is also a completely private document, unlike a will. When you develop a living trust, nobody but your trustee will know the details unless you share this information with others.
Types of living trusts
There are two types of living trusts, which include revocable trusts and irrevocable trusts. The most common is a revocable trust. These trusts allow you to change the terms of the trust at any time, making it a more flexible option. However, upon your death, your revocable living trust will automatically convert to an irrevocable one to protect your wishes.
Comparatively, if you create an irrevocable living trust, you cannot change its terms. If you do want to make changes to your irrevocable living trust, a judge would have to grant the alterations.