When planning your estate, you have different tools at your disposal to protect your assets for your loved ones. One such tool is a living trust, which many estate-planning experts consider to be a more iron-clad strategy than writing a will. As probate and inheritance laws vary from state to state, the considerations that go into creating a living trust will differ depending on where you live. If you’re considering creating a living trust in West Virginia, we’ll walk you through what you need to know.
Note that an attorney and a financial advisor can be valuable partners in the estate-planning process. SmartAsset can help you find a local advisor who suits your needs with our free advisor matching tool.
How to Create a Living Trust in West Virginia
Making a living trust in West Virginia consists of six primary steps:
- Decide which type of trust is best for you. Single people will naturally opt for a single trust, while married residents typically go for a joint trust. Couples can use joint trusts to store property individually owned by both spouses, as well as jointly held property like real estate and vehicles.
- Assess your property. Most of your assets, including investment accounts, vehicles and family heirlooms, are eligible to go inside a living trust. One notable exception is retirement plans like 401(k) accounts, but you can name the trust as the beneficiary in this case. Also, be sure to gather any necessary documents for your property, such as certificates of ownership, deeds and titles.
- Name a trustee. Many choose to name themselves, or you can name someone else. If you choose yourself, be sure to designate a successor trustee to take over when you die. This person will be responsible for the dissemination of your assets to your beneficiaries as per the terms of your trust.
- Create the document. You can do this yourself using online resources, or you can work with a lawyer.
- Sign the trust in front of a notary public.
- Fund the trust by transferring your assets into it. This can be done yourself, but the required paperwork might be easiest to complete with professional assistance.
What Is a Living Trust?
A living trust is a legal arrangement established by a document that can be used to store one’s property. All trusts have a trustee who is in charge of managing and distributing the trust’s assets. You can be your own trustee or pick someone else; if you choose yourself, though be sure to appoint a successor trustee who can take control after you pass away. Many people choose one of their children or another trusted relative or friend.
Living trusts come in two distinct varieties: irrevocable and revocable. An irrevocable living trust trust is permanent. You, the grantor, can’t alter or remove property from inside the trust without the permission of everyone named in writing. The trust owns everything placed inside it, and taxes are paid via the trust.
A revocable living trust, on the other hand, has flexibility. You can make changes or remove property on an as needed basis. You still own the assets in this situation, so you need to pay any relevant taxes as per usual.
How Much Does It Cost to Create a Living Trust?
The cost of creating a living trust depends on which method you use. If you make the living trust yourself with an online resource, it will likely cost no more than a few hundred dollars. You can also use a lawyer’s help to create your trust, but this will likely run more than $1,000. The exact cost depends on a combination of attorney fees, the complexity of your estate and the services rendered.
Even though making your own living trust might keep your wallet from slimming too much, DIY estate planning comes with its risks. You’ll have to do a lot of research and pay very close attention to detail. If that sounds intimidating or overwhelming, you’ll probably want to hire a lawyer.
In your search, make sure you know the fees upfront so there aren’t any unwanted surprises down the road. On top of this, make sure the lawyer you go with is a trust expert rather than just an estate planner.
Why Get a Living Trust in West Virginia?
A common reason people use living trusts is to help their family avoid probate, a process that can take a lot of time and can be a potential invasion of privacy. While some states have sought to simplify this process by adopting what’s known as the Uniform Probate Code, West Virginia has not done so. As such, avoiding probate may be particularly important here.
There are other reasons you might use a living trust as well. For instance, a living trust eases the process of leaving property to a minor, as you can leave the property under the trustee’s supervision until the child reaches a certain age. Further, a living trust allows you to avoid conservatorship in case you become incapacitated, as you’ll already have a trustee.
Who Should Get a Living Trust in West Virginia?
Living trusts provide benefits to more than just wealthy families, as they can prevent complications for any estate. This is particularly helpful in the state of West Virginia. The only notable exception to this would be if your estate is worth less than $100,000, as the state has established a simplified probate process for these estates. In this situation, a living trust may not be worth the time and effort.
Living trusts are generally more expensive and time-consuming to set up than wills. They also allow a longer time frame for legal challenges. Take these disadvantages into account when considering whether to get a living trust.
Living Trusts vs. Wills
Even if you make a living trust, you’ll still want to have a will in place. A will can direct the fate of any property that’s not placed in the the trust. Wills can also do the following that trusts cannot:
- Name an executor
- Provide instructions on how to pay taxes and debts
- Establish guardianship for children who are minors
- Select managers for children’s property
To get a better sense of how these two estate planning documents stack up, we compare living trusts and wills:
|Living Trusts vs. 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|
Living Trusts and Taxes in West Virginia
Creating a living trust probably won’t impact your taxes. In fact, there is no estate tax or inheritance tax in West Virginia. The federal estate tax could apply to you, though. However, according to 2019 federal estate tax laws, this only applies if your estate is worth more than $11.4 million, or $22.8 million for couples. In any case, a living trust shouldn’t impact your tax situation.
A living trust can be extremely useful for planning your estate, and the absence of the Uniform Probate Code in West Virginia only raises the potential benefits. If you think you need a living trust, feel free to try and make it yourself. It is recommended, though, that you hire a lawyer to guide you through all of the involved steps. Just remember that regardless of which route you choose, you’ll still need a detailed estate plan in place before you die.
Tips for Planning Your Estate
- Estate planning can be extremely complicated, but a financial advisor can help you get your plans in order. Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- Don’t forget to name a guardian for your children in your will. Obviously this is one part of an estate plan you hope never gets put into action, but it is always better to have a plan in case the worst happens. Don’t make the mistake of waiting until it’s too late.
Photo credit: ©iStock.com/EXTREME-PHOTOGRAPHER, ©iStock.com/Oleksii Liskonih