In 2012, nearlly 2.5 million people died without having signed a living trust or will beforehand, according to Forbes. Even though these types of legal documents may seem completely insignificant to people who are still living, it is of the utmost importance to families that have lost their loved ones in death. There are some states throughout the country that will claim all of the assets of a deceased person after a specified period of time if there was no sort of estate planning done before they passed.
For example, that waiting period in the state of New York is three years, according to the New York Times. Even though quite a few people have at least heard of a living will, most are not very familiar with a living trust. There are several advantages to having a legalized living trust developed, but there are also several key points that should be considered if you have made the decision to do so.
What is a Living Trust?
It is rather easy to mistake a living trust for a last will and testament, especially since they are both types of estate planning. However, they are completely different. A living trust is designed to allow you to fully control your affairs and manage your assets while you are still alive; a will is designed to take care of these things after you have died.
A living trust will give you the ability to make all of the important decisions now that may affect your well-being in the future. For example, you are able to officially select the individual that you would like to handle all of your affairs if you should ever become disabled or mentally incompetent. This prevents your family and friends from having to battle in a courtroom in order to gain control of your assets and make life-altering decisions if the need arises.
Take Full Advantage of All Tax Laws
When creating a living trust, it is very important for you to consider the different tax laws that will be affected by doing so. If your property and assets are transferred through a will after you have died, then there will be an estate tax imposed. An inheritance tax is factored in when property has been transferred from one person to the other and a gift tax becomes necessary if that transfer was done gratuitously. By establishing a living trust now, you will not have to worry about paying the inheritance and estate taxes so the federal gift tax could be the only one that is officially imposed, according to Einheuser Legal.
Invest the Expert Guidance of an Attorney
In order to make sure that you make the right choices when it comes to your estate planning, it is highly recommended that you seek the expert guidance of a licensed attorney or legal team. Even though you are able to establish a living trust without any legal assistance, there are quite a few steps involved that you will not want to necessarily complete on your own.