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Should you create a living trust in Montana?

Estate planning is a process that allows you to protect your assets in the event of your incapacitation or death. One way to do so is by forming a living trust. Living trusts are legal documents that ensure your assets are given to any beneficiaries you select. This article explores the process of forming a living trust in Montana and whether you should create one. If you’d like expert guidance with estate planning, SmartAsset’s free financial advisor matching tool pairs you with up to three local advisors suitable to your financial needs.

How to Create a Living Trust in Montana

This is how you’ll create a trust in the Treasure State:

  1. Select an individual or joint trust. Individual trusts are generally better for people who are single, while joint trusts are great for couples. A couple with a joint trust can save money by combining their individual assets into one legal document. Couples can also use two individual trusts.
  2. Take inventory on your property to determine what to store in your trust.
  3. Select a trustee to manage your trust. You can act as the trustee before death, but you’ll have to select a successor trustee to oversee your assets after you die.
  4. Create a trust document by hiring a lawyer or using a computer program.
  5. Sign the document in front of a notary public.
  6. Fund your trust by transferring any desired assets into it.

What is a Living Trust?

A living trust is a legal document that lets you transfer your property and assets to any beneficiaries you specify in the arrangement. This estate plan is distinctive because it goes into effect as soon as you create it. You can still be alive and either select a trustee, or act as the trust’s trustee. If you act as the initial trustee, your successor trustee will carry out your wishes and distribute your property to anyone you’ve chosen as a beneficiary.

There are two types of living trusts: revocable and irrevocable living trusts. With revocable trusts you can alter or revoke the provisions within the trust, but an irrevocable trust is essentially permanent. Provisions within an irrevocable trust can only be changed if approved by all the beneficiaries in the trust.

How Much Does It Cost to Create a Living Trust in Montana?

You can create a living trust by using an online program, or you can hire a lawyer. The method you choose will determine how much you spend. If you prefer DIY estate planning, you may only spend a few hundred dollars. This process could also be riskier since it requires more research and detail.

If you prefer professional guidance, a lawyer will be more expensive. A lawyer may cost you $1,000 or more, depending on the attorney you choose.

Why Get a Living Trust in Montana?

Should you create a living trust in Montana?

A common reason people create living trusts is because it’s a more private way of protecting their assets and determining which of their beneficiaries gets what. An alternative is to go through something called the probate process. This is a public judicial process where court officials authenticate a deceased person’s last will and testament documents. The court then determines how to distribute the decedent’s assets to any beneficiaries. This process can take months and incur numerous expenses. Montana has enacted the Uniform Probate Code which makes the probate process smoother and less time consuming. The state also has a simplified probate process for estates under $50,000. It may make more sense to use the probate process instead of a living trust.

If forming a living trust sounds intriguing, you’ll have many advantages for protecting and distributing your property. With a living trust you can establish a trustee and select beneficiaries while you’re still alive. You can also choose which assets and at what date certain property will be given to your beneficiaries.

Who Should Get a Living Trust in Montana?

Residents with large or small estate plans can benefit from forming a living trust, although it may be easier to use the probate process. The probate process will be even simpler for decedents with a net worth of less than $50,000.

You may also want to consider other estate planning documents like wills. Both living trusts and wills protect your property after you’ve died, but the two legal arrangements present key differences. We look further into them below.

Living Trusts vs. Wills

A key distinction between living trusts and wills are that trusts give you control over your assets while your still alive; wills don’t. In other words, living trusts take effect as soon as you create them, while wills are effective after your death. With a living trust distribute property to beneficiaries while you’re still alive, you could. With a will your beneficiaries would only receive assets after your death. Even if you do have a living trust, you’ll likely need a will as well, as a will can also do the following:

  • Name an executor
  • Offer instructions for taxes and debt
  • Establish guardianship for minors
  • Select managers for children’s property

This chart outlines and compares the capabilities of living trusts and wills:

Living Trusts vs. Wills
Living Trusts Wills
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 Montana

During your estate planning process, it’s helpful to know whether Montana has estate or inheritance taxes. Estate taxes may affect your living trust, and your estate size will determine how much you’re taxed.

Montana doesn’t have an inheritance tax or estate tax, but a federal estate tax applies to those with estates worth more than $11.4 million ($22.8 million for married couples).

The Bottom Line

Should you create a living trust in Montana?

Whether you use the probate process, a living trust or a will, establishing an estate plan is a necessary route for protecting your assets. Residents with small estate plans benefit from Montana’s simplified probate process, and Montana doesn’t have an inheritance tax or estate tax. The probate process will likely be less expensive than creating a living trust. If you’d rather use a living trust, you’ll have more authority in deciding how and to whom your assets are distributed.

Estate Planning Tips

  • Estate planning could be much easier with the help of a professional. SmartAsset’s free financial advisor matching tool can help you narrow down your advisor search. You’ll just have to complete a short questionnaire about your financial situation, and you’ll match with up to three local advisors who meet your needs.
  • You’ll also want to familiarize yourself with inheritance tax and estate tax provisions on a state and federal level. That way you can determine if any tax exemptions apply to your estate plan. In many states, you won’t even have to pay a federal estate tax if your estate is under a certain monetary value.

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Rickie Houston CEPF® Rickie Houston writes on a variety of personal finance topics for SmartAsset. His expertise includes retirement and banking. Rickie is a Certified Educator in Personal Finance (CEPF®). He graduated from Boston University where he received a bachelor’s degree in journalism. He’s contributed to work published in the Boston Globe and has worked alongside award-winning faculty for the New England Center of Investigative Reporting at Boston University. Rickie also enjoys playing the guitar, traveling abroad and discovering new music. He is originally from Wilmington, North Carolina.
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