Important Things to Know About Living Trusts
A living trust can offer people some advantages over a will, and people should understand what a trust is and how it may help them.
July 11, 2012
Most people know that they should have wills to distribute their assets and provide for their families after they are gone. However, a will is not the only way that people can accomplish that goal. A popular estate planning tool is a living trust. A living trust can offer people some advantages over a will, and people should understand what a trust is and how it may help them.What Is a Living Trust?
A living trust is a legal arrangement that governs a person's property while the creator is still alive. The trust document names three parties:
-The grantor: the person creating the trust
-The trustee: the person who controls the distribution of the trust's assets
-The beneficiary: the person or people who receive the trust's assets
Grantors transfer legal title to assets to trusts and the trustees then administer the assets in the trust. Grantors often name themselves and their spouses as trustees so they can continue to control their assets. Grantors also have the option of leaving instructions on how to distribute trust assets for any successive trustees that manage the trust after the grantor dies.
Living trusts are often revocable, so that the grantors have the flexibility to alter or abolish them. Once the grantor dies, however, the trust becomes irrevocable.
How Does a Trust Differ From a Will?
Wills and trusts may seem like the same thing, but there are some differences between the two. A will only goes into effect after the person who drafted it dies. A trust is effective as soon as the grantor creates it. A will governs the distribution of all of a person's assets, while a trust can only control assets that a grantor specifically puts in the trust.
What Are the Benefits of a Trust?
Trusts are beneficial because they can help people keep their estates from having to go through probate. Heirs can receive their inheritances sooner if they do not have to wait for the probate process to complete. Trusts can also help people avoid or reduce estate taxes by decreasing the amount of the taxable estate. Additionally, a trust can help people maintain privacy in ways that will cannot. Probate proceedings are public record, while trust documents are private.
Consult an Attorney
Living trusts can be useful estate planning tools, but they may not be appropriate for everyone's circumstances. If you have questions about the best way to protect and pass along your assets to your loved ones, talk to a seasoned estate planning attorney who can discuss your situation with you and advise you of your options.
Article provided by Law Offices of Harold H. Parker
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