A living trust is a legal document that allows you to transfer your assets into a trust while you are still alive, and have them managed and distributed according to your wishes upon your death or incapacity. Here are five benefits of having a living trust:
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Avoiding probate: One of the main benefits of a living trust is that it allows your assets to avoid probate. Probate is a court-supervised process of transferring assets to heirs, which can be costly and time-consuming. With a living trust, your assets can be transferred to your beneficiaries quickly and privately without going through probate.
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Maintaining privacy: Unlike a will, which becomes a public record after probate, a living trust is a private document that does not become part of the public record. This means that your financial affairs can be kept private and confidential, which can be especially important if you have complex or sensitive financial assets.
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Managing assets during incapacity: A living trust can also help you manage your assets in the event of your incapacity. If you become unable to manage your assets due to illness or injury, your designated trustee can step in and manage your assets on your behalf, ensuring that your bills are paid and your financial affairs are in order.
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Flexibility in distribution: With a living trust, you have more flexibility in how your assets are distributed to your beneficiaries. You can specify how and when your assets are distributed, and you can even set up ongoing trusts for specific purposes, such as providing for a disabled child or grandchild.
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Tax benefits: A living trust can also offer tax benefits, such as minimizing estate taxes and reducing capital gains taxes. By using a living trust, you can potentially save money on taxes and ensure that more of your assets go to your intended beneficiaries.