Why would you want to consider forming a Trust? There are many excellent reasons to utilize a Revocable Living Trust as part of your estate plan. Here are the most common.
A Trust is a highly effective estate planning tool. Wills, unfortunately, have more significant limitations. Nevertheless, the following are the most common reasons people opt for a Trust when doing their estate planning:
1. Cost (and time) efficiency: You want your heirs to avoid Probate after you die. Any assets transferred by a Will must go through Probate Administration. Any assets transferred by a Trust do not. Using a Trust to avoid Probate saves your heirs money and time. The costs of Probate are typically substantial. Likewise, by law, Probate lasts a minimum of 6 months and ten days. However, more commonly, it takes 1-2 years (sometimes longer, depending on the situation).
2. You want greater control over the timing of inheritance. With a Will, assets are distributed immediately after Probate (typically within a year or two after your death). A Trust survives after your death and can manage assets for many years if needed. So, suppose you have heirs that are younger (especially if they are under 18). In that case, you can hold their inheritance and distribute it in chunks over time. By way of example, you could have your children get 1/3 of their assets at age 21, another 1/3 at age 25, and the remaining 1/3 at age 30.
There are many other good reasons for creating a Trust, including greater privacy, preparing for illness or incapacity, and specific tax scenarios.