Those living in states with complicated or restrictive probate laws need living trusts to avoid probate and protect their privacy, states the New York Times. Those planning for mental incapacity and need to appoint trustees rather than court guardians to manage assets also need living trusts, reports About.com.Continue Reading
Probate, the process of court-supervised estate asset distribution, often involves a significant amount of time as well as attorney and court fees, as reported by Nolo. Assets in trusts are not subject to probate and go directly to beneficiaries. Additionally, although probate court proceedings are public records, trusts are private documents which leave the details of assets and beneficiaries confidential, states About.com. A living trust can substitute as a power of attorney if the owner of the trust becomes unable to manage financial affairs through illness or disability, reports AARP.
Owners of living trusts often name themselves and their spouses as trustees so they can maintain full control over the trust and change assets and beneficiaries as needed, according to AARP. Children or professional trust specialists are often named as successor trustees. Living trusts can specify exactly how and when assets are passed on to beneficiaries upon the owner's death. Owners of living trust have the flexibility to dissolve them anytime for any reason.Learn more about Financial Planning