What Should I Know about Living Trusts?

A living trust is a way to designate how one wants their assets disbursed after they are deceased. The primary objective of a living trust is to have more control over what happens and to avoid the time and cost of probate court. There are many additional benefits to having a living trust, which we’ve outlined for you here.

A Living Trust Avoids Probate

Probate is when the court system goes through the process of supervising the payment of a deceased individual’s debts and seeing to the distribution of their property. Most probates take months to complete and drain approximately 5 percent of the value of the property.

A living trust allows the person in charge of the deceased individual’s trust to transfer ownership into the beneficiary’s name. It avoids all of the legal and court fees associated with probate, and it takes much less time.

A Living Trust is Simple

Many individuals find that they can create their living trust quickly and easily. It is important to note that there is paperwork required to build a successful living trust. For example, a new deed will need to be signed showing that you are an owner as a trustee of your living trust.

There are many self-help books and online resources to assist individuals interested in creating a living trust. However, if you come across something you’re not sure about, it is always a good idea to seek sound advice from legal counsel.

A Living Trust is Private

When a will is entered into probate court, it becomes public record. A living trust does not become public record since it does not require the court system.

A Living Trust Can Protect Assets

Many aging individuals are concerned about their financial security should they need to live in a nursing home. Living trusts and nursing homes can work to an individual’s benefit. Those worried about the security of their assets should transfer their assets into an irrevocable living trust.

Various Types of Living Trusts

There are various types of Living Trusts that individuals can choose depending on their specific needs.

Irrevocable Trust

An irrevocable trust is just like the name suggests- it can’t be changed or revoked. Assets included in the trust are not accessible to creditors, making this kind of trust ideal of individuals susceptible to lawsuits.

Revocable Trust

A revocable trust allows the original trust owner to keep control of their assets while they are still living. Owners can shift their assets, and the trust can be amended or revoked.

Asset Protection Trust

An asset protection trust protects the individual’s assets from creditors. They can be established for a specific amount of time only, and upon expiration will be returned to the trust holder.

Charitable Trust

Charitable trusts are used to designate a charity as a beneficiary. They provide tax benefits and help bypass estate and gift taxes.

You Still Need a Will

Any property that hasn’t been designated in a living trust will need to be addressed in a will. Additionally, naming the trust in your will can help ensure that the trust is used correctly. When in doubt, it is always a good idea to contact a lawyer to make sure thing are done correctly.