Estate planning is the part of financial planning that allows you to protect your assets after your death. Youll have access to a range of options to ensure your assets are legally distributed to your desired heirs, but one of the best ways to do so is through a living trust. With a living trust youll be able to control how your assets are managed and distributed of as soon as you create it, not after you die. This article will take a closer look at the process of forming a living trust in Alaska and whether its right for you. If youd like professional assistance in your estate planning process, you may want to consider hiring a financial advisor. SmartAssets free financial advisor matching service pairs you with up to three local advisors within five minutes.
How to Create a Living Trust in Alaska
This is how youll form a living trust in The Last Frontier:
- Select the trust that best suits your current situation. You can either choose a single trust or a joint trust. If youre an individual, a single trust may be a better option. Couples typically use joint trusts, because they allow them to combine their shared assets into one trust.
- Take inventory on your property and assets. You can store things like stocks, mutual funds, property, documents of ownership and other investments in your living trust. Take this time to gather documents like housing deeds and car titles.
- Select a trustee to oversee your trust. You can either choose someone, or you yourself can act as the trustee before youve died. If you decide to act as the trustee, youll have to elect a successor trustee to manage your assets after your death.
- Create the trust document. You can either use a computer program or a lawyer for this.
- Sign the trust document in front of a notary public.
- Fund the living trust by transferring any desired property or assets into it. You can do this step on your own, or you can consult a lawyer for legal guidance.
What is a Living Trust?
A living trust is a legal agreement that allows you to transfer management of your assets to a trustee either before or after your death. The living trust goes into effect as soon as you form it, and it lets you name any beneficiaries to whom your property will be distributed. Typical assets you can transfer into your trust include property, investments, family heirlooms, bank accounts, automobiles and other titled assets.
There are two types of living trusts: revocable living trusts and irrevocable living trusts. Revocable trusts give the trust creator, or grantor, full control over assets and allow them to make changes or even cancel certain provisions altogether. Irrevocable trusts differ because theyre permanent. Once youve formed an irrevocable trust, you cant make any modifications or cancellations unless your beneficiaries grant permission. Grantors essentially lose control of the trust after theyve transferred assets into it.
How Much Does it Cost to Create a Living Trust in Alaska?
You can form a living trust through two ways: you can hire a lawyer or you can set up the trust through an online program. Hiring a lawyer is less risky because youll have the guidance of a professional, but it can also be more costly. If you hire a lawyer youll spend more than $1,000, while using a computer program will run closet to a few hundred dollars.
DIY estate planning requires more detail and research in order to establish a trust successfully. If you arent careful in setting up the trust, you could spend additional funds correcting any errors made.
Why Get a Living Trust in Alaska?
When it comes to estate planning, many people create living trusts to avoid the probate process. During the probate process, court officials determine whether the last will and testament of a deceased person is authentic. Officials also determine asset values and distribute them to beneficiaries after any remaining taxes or bills have been paid. The process can take many months, but some states use a Uniform Probate Code to simplify the process. Alaska uses the Uniform Probate Code, so you may want to consider using the probate process instead of a living trust.
If you decide to form a living trust instead, youll still have some notable advantages. For one, you can determine the exact date you want certain property to be transferred to your beneficiaries. Youll also still have your wishes carried out if you become mentally ill or incapacitated.
Who Should Get a Living Trust in Alaska?
Residents with large or small estate plans can form a living trust in Alaska, but you should still consider the probate process before forming one. Because Alaska uses the Uniform Probate Code, the probate process could be a better option. The state also offers a simplified probate process for small estates of less than $50,000.
Nonetheless, youll still need to use an estate plan if youd like to protect your assets after youve died. Even if you use a living trust, youll still likely need a will. But how do the two differ? We look further into the difference between living trusts and wills below.
Living Trusts vs. Wills
If youre convinced a living trust can improve your estate plan, a will is still good to have. With a living trust you can only transfer certain property into your trust, but a will allows you to account for other assets you couldnt include in your trust. A will can also do the following:
- Name an executor
- Offer instructions for taxes and debt
- Establish guardianship for minors
- Select managers for childrens property
This chart outlines and compares living trusts and wills and the capabilities of both estate planning documents:
Living Trusts vs. WillsLiving TrustsWills Names a property beneficiary Yes Yes Allows revisions to be made Depends on type Yes Avoids probate court Yes No Requires a notary Yes No Names guardians for children No Yes Names an executor No Yes Requires witnesses No Yes Living Trusts and Taxes in Alaska
You should research whether your has estate taxes or inheritance taxes if youd like to form a living trust. Alaska doesnt have an estate tax. Federal estate taxes only apply to individuals with larger estates of more than $11.4 million or married couples filing jointly with estates of more than $22.8 million.
Alaska doesnt have an inheritance tax either, but some states charge residents these taxes if they inherited property from someone who lived in a state with inheritance tax laws.
The Bottom Line
Alaska has enacted the Uniform Probate Code, so it could make more sense for you to use the probate process rather than a living trust. The state also offers a simpler probate process for estates less than $50,000. But if youd still prefer to form a living trust, you can hire a lawyer to help you, or you can set up the trust yourself. The DIY approach can save you money, but it requires precise research and planning. If youd rather have professional assistance, a lawyer may be right for you.
Estate Planning Tips
- If youd like professional guidance with your estate plan, consider using SmartAssets free financial advisor matching tool. Youll just complete a short questionnaire about your financial situation, and the tool will pair you with up to three local advisors within five minutes.
- Interested in learning more about estate planning? SmartAssets estate planning guide offers information on estate and inheritance taxes by state, and it provides useful knowledge about the process.
Photo credit: iStock.com/DNY59, iStock.com/Oleksii Liskonih