3 Reasons to Seriously Consider Using a Living Trust to Pass an Inheritance to Your Family

This article is intended for educational purposes only and is not legal advice. For guidance on your personal situation, please contact a lawyer.

Estate planning is like getting your car's oil changed or your teeth cleaned at the dentist: It's not necessarily something you look forward to, but it's a must-do for anyone who wants to avoid bigger problems later on.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. See the 10 stocks »

The good news is that there are multiple ways to approach estate planning, so you can choose the route that makes the most sense for you. One of those routes is a living trust.

While a living trust won't be the go-to for everyone, there are a handful of reasons to consider using one -- including the three discussed below.

Image source: Getty Images.

1. You can often avoid the dreaded probate process

Probate is a legal process in which a court determines a will's validity and then oversees the distribution of the assets listed in the will.

On one hand, having the court oversee this process can help ensure fairness and transparency, which can help prevent additional problems.

On the other hand, the probate process isn't exactly hassle-free. It can be time-consuming (taking months or even years in some cases), expensive, and more public than many people would prefer (more on that to come).

With a living trust, you can avoid the probate process altogether and potentially skip getting the courts involved.

2. A living trust can give you more privacy than a will

When a will goes through probate, it becomes a public document anyone can access. Anyone interested could potentially get information about what assets were inherited (and their value) as well as who inherited them. This isn't the case with a living trust.

Details about a living trust -- such as its assets, beneficiaries, and terms -- typically don't become part of the public record. Aside from simply not wanting people in your business, this is helpful in two major cases: avoiding potential conflicts regarding who received (or didn't receive) what, and shielding recipients from financial predators.

There are countless instances of relatives becoming estranged because they disagreed with how an estate was divided. It's unfortunate, but it happens and can cause lasting tension.

Regarding financial predators, public records can make beneficiaries targets for fraud, scams, and exploitation. For example, let's imagine someone leaves a large lump sum of money to a young beneficiary who might not be financially savvy or mature enough to handle it responsibly. Having this information public can leave them susceptible.

A living trust provides privacy that could help inheritors avoid such situations.

3. Living trusts provide a lot of flexibility

Living trusts are also known as revocable trusts: They can be modified or revoked entirely while the grantor (the person who created the trust) is alive.

This ability to make changes is crucial for adjusting to major life events, such as marriage, divorce, the birth or loss of a child, or changes in financial standing. People don't always anticipate those things happening, but it's nice to have the flexibility of a living trust if they do.

You always want to ensure your trust is aligned with your current situation and wishes.

A simple amendment might do the trick for minor changes. For more significant changes (like overhauling the distribution process), you may have to redo the whole trust.

Although the latter isn't difficult to do, it's best to consult an attorney to ensure the changes are properly executed, which typically involves more costs. Although it may not be ideal to spend more to update your trust, it beats causing misunderstandings or anything that could complicate the process down the road.

The $22,924 Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $22,924 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.

View the "Social Security secrets" »

The Motley Fool has a disclosure policy.