What is Living Trust?
A living trust is legal document, a property interest, which was created by the grantor throughout that person’s life. Living trusts especially allow the easy transfer of assets without having to go through probate. It is much like a last will which spells out your desires when it regards to your properties, dependents and heirs. In living trust, the beneficiary lets the trustee hold his or her funds and assets’ legal possession.
It is different from all other kinds of trusts which are usually created by that person’s will. The main difference is how it bypasses the process of probate which is quite a costly and real time consuming procedure. With living trust, the successor trustee is enabled to accomplish the grantor’s instructions as they are documented on the living trust.
The successor trustee’s role is basically just like an initiator of the will, carrying out instructions at the death of the grantor or when he or she cannot manage their financial, legal and healthcare affairs. The great thing with living trusts is that they are available in a lot of places, from estate preparation lawyers, from online resources and even ready-made software.
When to choose to have Living Trust?
If you are an individual with complicated circumstances regarding your personal or financial affairs, living trust is most suitable for you. They are perfect if you are in a unified family, when you have properties in some other states, or when you have quite the substantial assets. If your circumstances is uncomfortable and you don’t feel like trusting your private knowledge and decision, having a estate-planning lawyer draw up a living trust document for you is a wise decision.
This way, you can have a peace of mind that all your wishes would be done precisely as you want them, albeit you are likely to spend more money on it. Living trusts are not only helpful to those with complex personal or financial situations but for unmarried people as well. If the person’s wishes cannot be rewarded by means of designating a beneficiary, powers of attorney or the survivorship titling alternative, getting a living trust is one of the options.
There are basically two kinds of living trusts. The two forms of living trusts are the revocable living trust and irrevocable living trust. In case of a revocable living trust, your assets will be transferred to the trust’s ownership. As the trustee of the trust, the control of the assets is still yours. With that, you are able to change or even revoke the anytime. It also means that your assets can go straight to your recipients with going through the process of probate.
On the other hand, the irrevocable trust is when your assets are given away permanently throughout your lifetime. Because you cannot revoke the possessions you have given away, this is mostly appropriate in the very rare circumstances. When you have given away your assets, you also relinquish all your control as well as interest in them. This means that those properties are no longer aspect of your country estate and thus are not subjected to estate taxes.
Benefits of Having a Living Trust
The living trust is a legal document truly helpful when you are in complicated situations or simply does not want to trust your personal decisions regarding finances. With the help of a trusted representative, your assets and funds will be carried out for your benefit during your lifetime and transferred to your beneficiaries at the time of your death.
There are three main benefits with living trust – it avoids the probate process, provides privacy and helps you save money. The main reason why people choose to living trust instead of will is because it does not have to go through the process of probate. In the case of a valid will, the grantor’s estate will have to go through court proceedings aimed to distribute the assets according to the grantor’s wishes.
But with living trust, there is faster distribution since it does not go through the process of probate. From the months to years that a valid will has to go through in distribution of the assets, it only takes weeks with living trust. The successor trustee will be able to pay all the grantor’s debts and have the assets distributed according to his instructions.
Another of the advantage of living trust is that you have a higher level of privacy with it. A will is public record which means that all transactions made are public records as well. On the other hand, the living trust remains private until your death and upon that time your assets will be distributed privately as well. Of course, the best benefit there is with living trust is that it allows you to save money.
At first, it does take quite a sum of money to draft a living trust since it is a more complicated legal document. You will also have your assets transferred to the trust by means of a separate paperwork so it also means it will cost money. But compared to writing a will, this does not have to go through probate which will be a lot less in cost.
Probates usually take months to years so that means quite big money to be spent with. On that note, a living trust can successfully save you time and money for the distribution of your assets. The process will be a lot simple and the costs are nominal at best. In a lot of ways, it is ideal to get a living trust instead of a will.
If you are in a complex situation and you want to be sure that your wishes will be carried out with regards to your finances, a living trust is the wisest choice. It will save you on the arduous process of probate, keeps everything private and saves you time and money as well. It makes ideal if you want to be able to enjoy your estate and ensure that what’s yours will be given to your beneficiaries without taking a long, long time.