Because so many people in this country still have prejudices against those in the LGBT community, same-sex couples may have issues with certain family members inheriting any of their estate. Simply leaving someone out of a will may not be enough, as a family member could challenge a will in court. Even if the challenge is not successful, the legal expenses and time could diminish and delay the inheritance that the beneficiaries should receive.
Establishing a living trust may sidestep the potential for angry family members to cause problems.
What is a living trust?
A trust is an estate planning tool that can take over ownership of the trustor’s assets. He or she creates the trust, transfer assets to it, and then names a trustee to manage the assets. The trustor may serve as the trustee in some cases. The trust includes instructions for managing and distributing the assets after the trustor dies, as well.
For example, the trustor may leave a directive for the trustee to transfer ownership of the assets directly to the beneficiaries. Or, the trust may instruct the trustee to continue managing the assets in the trust and provide beneficiaries with an allowance each month.
What are the benefits of a living trust?
Trusts are much more difficult to challenge than wills, so the chances of a disgruntled family member causing a legal dispute are low. The assets that go through probate show up in the court record, but assets belonging to a trust do not go through probate with the estate. Privacy may prevent someone from discovering how much the beneficiaries receive.
Tax benefits vary depending on whether the trust is revocable or irrevocable. Assets in a revocable trust still belong to the trustor while he or she lives, so these assets are subject to taxes. An irrevocable trust owns the assets, so they remain intact throughout the trustor’s lifetime. However, the trustor cannot manage or change an irrevocable trust without the permission of all its beneficiaries.
Perhaps most importantly, preventing conflict for loved ones and securing their rights to inherit can provide peace of mind for everyone.