How do you determine the advantages of a living trust?


Quick Answer

The advantages of a living trust are determined by the amount of property owned, and legal expenses related to creating a trust versus a will. In general, large property assets are more suitable for a living trust. Asset privacy is another advantage a trust has over a will.

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Full Answer

Living trusts have a distinct advantage over wills when it comes to avoiding probate. A living trust transfers property ownership to the trust, protecting it from the long probate process. For example, a jointly owned property in trust is automatically transferred to the surviving owner upon the death of the trust partner. This is in stark contrast to a will, which puts the property in probate before ownership is transferred. Determining whether or not to set up a living trust requires a thorough review of all assets. Certain assets, such as retirement benefits, don't require probate.

The amount of legal expenses involved in creating a living trust must also be considered. Fees for creating and administrating a living trust are much higher than for last will and testament documents. A trust does provide secrecy to property holders; assets in a trust are private. Contrary to what some people believe, a living trust doesn't provide any protection from paying real estate property taxes.

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