Living trusts are trusts that you create while you are alive. In estate planning, most people know the vague idea of a trust but may not know the specifics of how it works. They also may not know how a trust can benefit a person in case your beneficiaries change or you choose to disinherit a family member.
A living trust, according to Forbes, provides you with the means to keep your assets in the family. Also, it provides you with a means to restrict assets.
Why a trust works better than a will
If you use a will to disinherit a family member, that family member may challenge your decision, explains Forbes. He or she can claim that you were under undue influence and that the decision to disinherit reflects someone else’s intentions, rather than your intentions. Wills are also public. If you decide to disinherit someone but do not want him or her to feel public shame or embarrassment, a trust is a better option.
Also, with a trust, you have more control over the inheritance and disinheritance. Say that you do not want to completely disinherit your family member but do want to leave him or her less of your assets. This is easier to do with a trust.
How to discourage a contest
If you worry about your family member arguing that he or she deserves more after a limited inheritance, you can discourage any fighting. You may want to include a no-contest clause. If you restrict a person’s inheritance and he or she contests it, then the person inherits nothing.