The primary reason why one-fifth of American adults choose to have a living trust is to avoid probate. By getting around probate – the full court proceedings governing asset distribution – your heirs will receive your assets much faster. They could receive their inheritances within weeks rather than months or years. Many people in Cincinnati opt for living trusts. Here’s how it works.
Difference Between Living Trust and A Will
A standard Will goes into effect after you die. A living trust, however, begins to work while you are still alive. During your lifetime, you place your assets into a trust for your own benefit, and select someone to be your “successor trustee.” While you are alive, this trust is where your assets exist. Then, upon your passing, the successor trustee transfer your assets to the beneficiaries in the way that you have specified in the trust.
These living trusts are also called “revocable trusts” or “inter vivos trusts.”
One big difference, however, is in the amount of privacy a living trust affords you. Unlike a Will, a living trust is never made public. Asset distributions happen in private. Nobody in Cincinnati — or anywhere else for that matter — needs to see the details of your estate. The discretion of keeping such matters under wraps may be reason enough to pursue a living trust.
Another difference is that you can empower your successor trustee to begin managing your assets while you are alive, in case you become ill or otherwise unable to attend to your business dealings.
The peace of mind this arrangement can grant you can be a great comfort. If you have a condition that you know will advance over time, you can set up your living trust right now. That way, you can decide what you want your successor trustee to do on your behalf, and then watch that transition happen. You can advise this successor trustee while you still able to do so, and relax in the knowledge that your trustee understands your preferences and desires, and can carry out your plans respectfully and responsibly.
Avoiding Probate with a Living Trust
And, while a living trust costs more to prepare, as it is a more complex legal document, it can save money in the long run by avoiding probate. A living trust also takes more time at the preparation stage, as you will need separate paperwork to transfer stocks, bonds, and bank accounts into your trust.
The timing of probate vs. non-probate can differ dramatically.
Ohio’s probate law is thorough and detailed, and the probate process can be quite slow. If you go through probate, the executor of your estate will need to gather all of your assets, and full documentation. This is not always easy or clear. The executor will then need to pay all of your bills — to creditors, to cover all accounts, and to cover the costs of your funeral and burial arrangements. All of this must happen before the executor can even begin to prepare a final accounting statement. After that statement is prepared, the probate court can prepare for your assets and property to be distributed among your beneficiaries.
With a living trust, however, you can start the process now, and oversee it while you are still able to do so.
Communicating Your Plans
We recommend you discuss your estate plans with your beneficiaries, particularly with your adult beneficiaries. Legal documents such as living trusts may be unfamiliar or confusing to some of your loved ones, and having a basic understanding of what you are putting into your estate plans can avoid significant confusion in the event that something happens to incapacitate you.
The specific details of your Will or your living trust may not be necessary for such a conversation. But explaining the function of a living trust can help. Sharing the contact information for your living trust attorney can help as well.
Having an open line of communication about your estate plans may set their minds at ease, too. By knowing that you have been thinking about contingency plans and preparing for their care and well-being, your loved ones may rest easier at night. This information may ease some of their anxieties, particularly if you have been dealing with health issues in recent years.