A living trust is a specific type of trust that works well for estate planning. It is considered “living” because you create it now while you are still alive.
You create it immediately, sign it, and move assets into the trust whenever you would like. However, the benefit of the living trust really starts to take shape only after the settlor of the trust passes away or becomes incapacitated. Once you pass away, the trust becomes irrevocable, and it can be used to distribute trust property.
What are the top benefits of creating a living trust in Missouri.
You can save on estate taxes by avoiding probate.
When assets are placed in a trust, they are removed from your estate. For some, that can mean that your loved ones pay significantly less in federal estate taxes after you pass. Missouri does not have an estate tax at the state level.
You can also plan to avoid the probate process entirely. The term “probate” is a general term for the administration of your estate, usually based on whatever you have set out in your will. The probate process requires that you open an estate with the court in Missouri. That process can be both time-consuming and expensive.
On the other hand, a living trust can help you avoid this process altogether—the trust document sets out how a trustee should administer assets, so there is no need to do the same thing in probate.
You have more control over trust assets.
While you can set out your desires and intentions for your money in your will, you cannot dictate how that money is used in a will. A living trust allows you to assert a lot more control over the value of your estate than a will allows.
For example, imagine you want to leave your son a large amount of money after you pass. However, your son has a history of spending money foolishly. You can create a trust that dictates how the money can be used or how much of it can be used. The money will sit in an account that is controlled by a trustee based exclusively on your wishes as set up in the trust document. You can also use the trust in this way to protect the money from your son’s creditors as well.
Protect minor children.
Giving money directly to minor children is sometimes not an option and rarely a good idea (especially if it is a significant amount of money). Creating a trust can help you give minors money directly without relinquishing control of those funds to the child. A trust holds the money, and the trustee administers that money until the child is old enough to handle the funds themselves.
With a living trust you can protect the assets for your children or grandchildren.
A trust can also establish rules for how you want to distribute property. For example, imagine you want your spouse to have money to live on, but you really want a specific property or a certain amount of money to go to your children. If you have concerns that your spouse will spend the money in your estate or otherwise disinherit your children, you can create a trust that avoids these undesirable effects.
Perhaps you allow your spouse to take the income from a piece of real estate (like farmland or rental property), but you prohibit them from selling the land. The land (or the income) then transfers to your children after your spouse’s death. You can do the same type of thing with land that has been in your family for centuries if you are worried that a spouse or child will try to sell it.
Keep your estate affairs private.
The probate process is public. That means everyone can see what is in your will and how you want your assets administered. A trust does not have to go through that process, which means you can maintain a certain level of privacy that is not available when you probate a will. If keeping your family’s financial matters private is important to you, a living trust might be a good option.
Protect yourself while you are living.
You can also use a living trust while you are living as well. You can, for example, set it up so that someone administers your assets and takes care of your financial affairs if you become incapacitated. This benefit is particularly important for those who are unmarried or do not have children.
If you are worried about creditors, ensuring that your trust is irrevocable can also help shield assets from collection efforts.
Talk over your unique estate planning needs with an experienced estate planning attorney in Missouri. Contact us online or call 417-242-5145 for more information or to schedule an appointment.