Many people incorrectly believe that only millionaires should implement a living trust as the main component of a foundational estate plan. For anyone whose total individual wealth exceeds $100,000, a Trust must be created. Remember, that $100,000 number includes your house, your bank accounts, your car, your brokerage accounts, jewelry, paintings, baseball card collections, and yes, it even includes any life insurance policies you may have at the time of your death. Even though the beneficiary will collect the full benefit amount without any tax liability, her estate will be affected by an estate tax on that benefit amount.

There are four main advantages to using a living trust for your estate planning needs instead of relying entirely on a will.

First, all wills must be probated. Everything you own at the time of his death must be legalized. Attorney fees range from three (3) to ten (10) percent of the estate. Personal representatives and executors are also entitled to a fee. The assets of the trust do not go through legalization. Therefore, you save attorney fees and executor fees. For more information on the dangers of probate, please contact my office for a copy of the article, Avoid succession at all costs.

Another advantage of using a living trust is the efficiency with which the assets can be currency. Probate usually takes between six (6) months and two (2) years. If an estate tax return must be filed, probate takes a minimum of one year. I have a client who is entering his fourth year of succession. All the time, the assets are immobilized and cannot be enjoyed by the beneficiaries. Trust assets, on the other hand, can be distributed without the involvement of an attorney or court, and therefore can be distributed faster. In many cases, it is as simple as the Trustee providing a copy of the Trust and a Death Certificate to access and distribute the assets.

A third advantage is control. With a will, once his assets are distributed to his heirs, he no longer has control over them. Your beneficiaries may frivolously spend your inheritance on cars, drugs, alcohol, or worse. If they are responsible enough to save the money they are given, it may be taken from them through litigation, divorce, or even creditors. By using a Trust to distribute your assets, you can protect your beneficiaries from losing the assets you gave them and from anyone else who tries to take the assets from them. When you die, your living trust becomes an irrevocable trust and forms a layer of asset protection for your beneficiaries.

Another way a living trust is superior to a simple will is privacy. Upon death, wills are registered and can be viewed or copied by the public. The will is made public, as are any disputes arising from it, which can cause embarrassment to your family. Trusts do not have to be registered. If you prefer, no one has to know the exact terms of your Trust except you, your attorney, and the Trustee you name as the person or entity charged with enforcing the Trust.