One of the biggest misconceptions around estate planning is that unless you’re a multimillionaire, you don’t need anything more than a will. Living trusts, in particular, are often viewed as something that only very wealthy people need.
In fact, a revocable living trust can benefit just about anyone who has assets they want to easily pass on to beneficiaries without the time and red tape (not to mention lack of privacy) that goes along with probate. Further, they don’t have to be difficult to set up and maintain if you have experienced estate planning guidance. You can designate beneficiaries for the assets in your trust, just as you would in a will.
What can you put in a living trust?
When you set up a living trust (and any time afterward), you can place assets in it. That’s known as funding it. Generally, these are assets with a deed (like a home) or other ownership document (like bank accounts). To place these in your trust, you just need to change the name on them to reflect the name on the trust instead of your own name. You can also make your living trust a beneficiary of assets that allow named beneficiaries, like investment and retirement accounts.
If you have high-value assets like jewelry, art or antiques that don’t have any kind of ownership document, you’ll need to clearly indicate that they’re part of your trust. Generally, that involves listing them on an attachment to the living trust document.
Why you still need a will
Even with a living trust, you still need a will. There are other purposes a will can serve besides naming beneficiaries – such as designating a legal guardian for a minor child. If you don’t need to do that, your will can be fairly simple. You may hear or see the term “pour-over will.” That’s because you’ll have a provision in it that covers any assets not included in the living trust and how they’ll be distributed. This may include smaller assets like furniture and anything you may not have gotten around to placing in your trust yet. The will “pours over” these assets to help ensure they go to whomever you designate.
These are just a few highlights of how revocable living trusts work and how they help you achieve your estate planning goals. As noted, having experienced legal guidance is crucial to helping you create and maintain a revocable living trust.