A Living Trust? How Does It Benefit My Estate Planning and Do I Need One?
A Living Trust can provide significant benefits to those who want to protect their assets. As you consider your estate plan, knowing what a living trust is and its purpose will help you assess whether it's right for you. Please consult an attorney as they will not only know whether a living trust will benefit you, but what type of trust might best meet your needs.
A Living Trust is a legal arrangement where a person (the trustee) holds assets on behalf of another person (the beneficiary). The person creating the trust, also known as the settlor, transfers ownership of their assets to the trust while they are alive. The trust then holds and manages those assets for the benefit of the beneficiary.
There are several types of living trusts, including revocable living trusts and irrevocable trusts. A revocable living trust can be amended or revoked by the settlor at any time, while an irrevocable trust cannot be amended or revoked once it has been created.
There are several reasons why someone might create a living trust:
Avoid probate: When a person dies and leaves behind a will, their assets must go through the probate process before they can be distributed to the beneficiaries. This process can be time-consuming and expensive. By transferring assets to a Living Trust, you can avoid the probate process and ensure that your assets are distributed to your beneficiaries more quickly and efficiently.
Asset protection: A Living Trust can also be used to protect your assets from creditors or lawsuits.
Estate tax planning: For high-net-worth individuals, a Living Trust can be used to help minimize estate taxes.
Incapacity planning: If you become incapacitated and unable to manage your own affairs, a Living Trust can allow someone else to manage your assets on your behalf.
To create a Living Trust, you will need to transfer ownership of your assets to the trust and name a trustee to manage those assets. You will also need to name a beneficiary or beneficiaries who will receive the assets held in the trust upon your death. You can be the trustee of your own Living Trust, which allows you to maintain control over your assets while you are alive. Once the trust has been created, you can manage the assets held in the trust just as you would any other assets that you own.
I am happy to provide resources for you as well as refer you to an Estate Planning Attorney. Please reach out if I can assist you in any way.
Next post in this series: Durable Power of Attorney
* As always, I am not an attorney and cannot offer legal advice but will be happy to refer you to an attorney upon request.