Okay, so you’ve heard about living trusts, but you’re not really sure what they are or why you might need one? No worries, we can break it down. Think of it like this: a living trust is a way to manage all of your stuff while you’re alive and make sure it goes to the right people when you’re gone, without all the hassle of going through probate.

Imagine you have a house, some investments, maybe a car, and you want to make sure your kids inherit it all someday. Normally, when you die, there’s this thing called probate. It’s basically a legal process where the court figures out who gets what. It can be slow, expensive, and a bit of a headache. A living trust helps you skip a lot of that.

Here’s how it works: You create this legal thing called a trust. It’s like a container for all your valuable things. You then transfer ownership of those things – your house, your investments, whatever – into the trust. Now, here’s the clever bit: you get to be in charge of the trust while you’re still alive! You’re basically the manager of your own stuff. You can still live in your house, use your money, all of that.

Think of it like this: you’re moving your belongings from one pocket to another, but you still have access to everything. The trust is just a different way of holding your assets.

Now, why would you do this? Well, there are a few good reasons:

• It makes things easier for your family: When you die, your stuff goes directly to the people you’ve chosen in the trust. No long waits in court, no legal battles. It’s a smoother, faster process.
• It keeps things private: Wills become public record, meaning anyone can see what you owned and who you gave it to. A trust is generally more private.
• It can help if you become unwell: If you become unable to manage your own affairs, the person you’ve chosen as trustee (someone you trust, like a family member or a lawyer) can step in and manage things for you, according to your instructions in the trust.
• You can change your mind: The cool thing about a revocable living trust is that you can change it whenever you want while you’re alive. If you decide you want to give something to someone else, or if your circumstances change, you can adjust the trust.

Okay, so what are the downsides? Well, setting up a trust costs money. You’ll need a lawyer to help you do it properly. Also, it’s a bit more complicated than just writing a will. And, for tax purposes, it’s generally treated as if you still own the assets, so there aren’t usually any immediate tax benefits.

When might a living trust be a good idea for you? If you have a lot of valuable stuff, if you want to avoid probate, if you’re worried about what might happen if you become incapacitated, or if you just want more control over how your assets are distributed after you’re gone, then it’s definitely worth considering.

Setting it all up

How do you actually set one up? First, you need to talk to a lawyer who specialises in trusts. They’ll help you create the trust document and make sure everything is done correctly. You’ll need to choose someone to be the trustee (this can be you, or someone else), and you’ll need to decide who your beneficiaries will be (who gets your stuff). Then, you’ll transfer your assets into the trust.

Living trusts aren’t for everyone, but they can be a really useful tool for estate planning. If you’re thinking about setting one up, it’s always best to talk to a legal professional who can advise you on your specific situation. They can help you decide if a living trust is the right choice for you and your family. Get in touch with us at Van Dyk Attorneys, and we can walk you through this whole process and keep it simple. 

If you find yourself needing a trust,  get in touch with our team here. For updated information and advice, follow our social media channels.