A trust is a legal arrangement that allows a third party, or trustee, to hold property on behalf of a beneficiary or beneficiaries. A trust allows you to maintain control of property while not being the “owner.” If properly set up, property held in a trust is not subject to the probate court and, therefore, allows the beneficiaries to gain access to your property more quickly than they might to property transferred using a will.
A living trust is a special kind of trust which can be an extremely valuable estate planning tool. Simply, it is a revocable trust – meaning you can change or cancel it – that keeps your assets outside the probate process, yet allows you to retain control over them during your lifetime. With a living trust, you can transfer property into a trust, nominate yourself to serve as trustee, and set it up to allow you to receive the benefits of ownership while you are alive. At the time of your death, a successor trustee – which is someone you will select – will take control of the trust, and assets contained therein, and will distribute them according to your instructions in the trust document.
A living trust can also be “irrevocable,” meaning you cannot change or revoke the trust once it is established. An irrevocable trust is valuable in that it provides the benefit of tax savings. Property in a revocable trust is still treated as your property for tax purposes.
A trust can also be set up in your will. This is called a testamentary trust (as opposed to a living trust, which is set up while you are alive).
Key Ways A Living Trust Can Help You
Living trusts are extremely valuable estate planning tools, as they can help you in many ways, including:
- Avoiding the probate process. Property can be transferred more quickly through a living trust compared to property transferred through a will. In addition to saving time, having a living trust will also avoid the costs of probate court and having a will administered.
- If you become incapacitated, a living trust can help you avoid a guardianship where a court appoints a “guardian” to manage that your finances and make other important decisions for you. A living trust can eliminate the need for guardianship proceedings as you will have already nominated someone to serve in this capacity of your behalf.
- Living trusts are more difficult to challenge than wills. In a probate, your heirs can challenge the distribution of your property and each action taken by the executor. Living trusts do not involve the court’s oversight at all. Moreover, given what it takes to establish a living trust, it is more difficult for someone to claim that you were of unsound mind or under duress when it was created.
- Your living trust can provide financial support for others, like children or grandchildren, without giving them control of property.
- Privacy. Since living trusts are not administered through the courts – which are open to the public – property distributed through a living trust has the additional benefit of privacy and are easier to keep confidential.
- Lower estate taxes. Depending on the value of your estate, a living trust can be used to help lower the estate taxes due on your death.
- Caring for your children. A trust lets you name someone to manage the money your children are to receive, how to spend and save it, and when to turn it over to the children.
- While you’re alive, you can be the trustee to manage the property you put in trust.
Creating A Trust
A living trust is created by a written trust document which (1) names a person (typically, you) or entity to serve as the trustee; (2) names a successor trustee to take over when you die or are incapacitated; (3) names the beneficiaries; and (4) sets forth instructions on how to manage and distribute the property in the trust. In connection with creating the trust document, property that will be held in the trust must be transferred to it. You can place almost any type of property in it, including stocks, real estate, and money.
There are many reasons to have a living trust, and people who are planning their estate should look into whether they would benefit by having a living trust. Our law firm can analyze your family and financial situation and advise you if a living trust is right for you as well as help you prepare a living trust that is tailored specifically to your needs.
Contact an attorney at Triscaro & Associates today. Please call us for all your legal needs. We offer a full range of legal services to individuals, families and businesses, including personal injury, estate planning, real estate, family law and business matters. We are dedicated to providing the highest quality legal services at a reasonable cost.