With a Living
Trust, you can set up a flexible estate plan that fits your needs. Created
during your lifetime, a Living Trust allows you to transfer your assets to a
separate legal entity. One common benefit of a Living Trust is that it helps
prevent your estate from going through the probate process, saving time for the
family members you leave behind. Create a Living Trust to control your assets
and property while providing for your family after your death.
Note: This trust is NOT appropriate for individuals whose
estate (including life insurance proceeds and retirement plans) exceeds the
federal estate tax applicable exclusion amount of $5,250,000.
Use a Living Trust
if:
You own property to
be dispersed upon your death.
You want to designate
a person or organization to receive your assets, including Digital Assets,
after your death.
You want to
designate a person to act as your executor and carry out your wishes.
You want to have a
system in place for the management of your assets and the care of your children
if you become unable to manage or care for them yourself.
Other names for a Living Trust
Inter Vivos Trust, Revocable
Living Trust.
How Living Trusts Work:
First, you’ll need to create a
trust and transfer ownership of some of your property to the trust. When doing
so, name yourself (and your spouse, if you so choose) as trustees. This means
that you’ll retain control of the property. Then, in your Living Trust, name
the beneficiaries you want to receive this property after your death. Appoint a
competent and responsible “successor trustee” to handle the distribution of
this property.
Living Trust v. Will:
One of the most common
questions people have when they’re creating an estate plan is “what’s the
difference between a Living Trust and a Will?” You should know that while laws
do vary state to state, there are a few important differences to keep in mind:
Living Trusts help avoid
probate: The probate process can be costly and can
significantly cut into the property and assets you leave your heirs. While
creating a Living Trust is a bit more difficult than making a Will, it does
allow your heirs to avoid probate, thereby keeping more of your assets and
getting those assets much more quickly.
A Living Trust is private: Wills are, in the end, public documents. A Living Trust, on the other
hand, is not. If you have certain assets you’d like to keep private or if the
idea of your last wishes becoming public isn’t something you’re comfortable
with, a Living Trust might be right for you.
Transfer of property: Both a Will and a Living Trust allow you to transfer property. In a Will,
you simply name the property. In a Trust, however, you must make certain to
transfer that property into the trust. You may still use the property in
question while you’re alive, but you won’t technically be the owner, since
you’ve placed it in a Trust.
Notary Public: In some states, you don’t need the presence of a notary public when
signing and witnessing a Will. But for a Trust, you do. Make sure your Trust is
legal by signing it with a certified notary.
Guardianship: You cannot name a guardian for your children in a Living Trust. To do so,
you must use a Will. This is why parents of small children often create both
documents with the help of a trained estate planning attorney.
Revocable vs. Irrevocable
Trusts:
The most common types of
Trusts are Revocable Living Trusts. This means, simply, that you have the right
and the ability to nullify the Trust itself and either create a new one or use
other estate planning documents to organize your affairs. An Irrevocable Trust,
on the other hand, is a much more complicated document, generally created by
those with a lot in the way of assets. Although it’s never a bad idea to have
an estate planning attorney look over your Trust, it’s especially important if
you’re going to make your Trust irrevocable.
Other estate planning
documents:
A Living Trust is just part of
a complete estate plan. Here are some other documents you should consider:
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