A living trust can be a beneficial tool for managing and protecting your assets ─ both during your lifetime and beyond. But who needs a living trust? Knowing who needs a living trust, as well as the different types of trusts available, is an important step in estate planning.
What Is a Living Trust?
A living trust, also known as a revocable living trust, is a legal arrangement in which an individual, known as the grantor, transfers ownership of their assets to a trustee to manage on behalf of the beneficiaries named in the trust.
The grantor retains control over the trust assets during their lifetime and can make changes or revoke the trust at any time. When the grantor dies, the trust becomes irrevocable, and the assets are distributed according to the grantor’s wishes as outlined in the trust document.
Living trusts are often used as an estate planning tool to avoid probate, reduce estate taxes, and ensure the smooth transfer of assets to beneficiaries. They can also provide privacy, as the trust document is not a matter of public record like a will. Additionally, a living trust can provide for the management of assets in the event the grantor becomes incapacitated.
If you own real property in multiple states, your living trust can be set up to manage property in those states and enables the grantor to transfer assets away from probate court.
Learn the Benefits of Living Trusts.
One of the key benefits of a living trust is that it provides greater control over how your assets are distributed after you pass away. This can help ensure that your possessions go where you want them to go and that unexpected tax burdens or gaps in coverage don’t occur.
Who Needs a Living Trust?
Here are some reasons why you might consider setting up a living trust:
Helping your loved ones avoid probate court.
Probate court can be expensive and take a lot of time. If you die owning assets in your personal name, those most likely need to be administered through the probate court. However, a living trust can help you manage and distribute your assets according to your wishes after your death, without the need for probate court proceedings.
Greater flexibility in terms of how and when your beneficiaries receive money after you die.
With a living trust, you decide who will receive what assets and when they will receive them. Otherwise, with a typical probate, young children get their money when they turn 18. Others get their money right away. There are no boundaries set up to help them make good decisions.
A living trust can help you keep your affairs private because it does not become part of the public record. A will, however, is subject to probate court proceedings and becomes part of public record.
A living trust can also be used to plan for your incapacity, allowing a successor trustee to manage your assets if you become incapacitated.
Avoidance of Conservatorship Proceedings.
A living trust can help you avoid conservatorship proceedings in the event of incapacity, which can be time-consuming and expensive.
You are in a blended marriage (relationship).
If one or both of you have children from a prior relationship, and you name each other as joint owners of your accounts and assets, you are risking disinheriting one side of the family. Here’s how it works. When one of you dies, everything goes to the survivor. Then when that person dies, that person’s kids or loved ones get everything. A properly drafted living trust can help prevent this “winner takes all” situation.
You own property in different states.
A living trust can be especially beneficial for those who own property in multiple states. By setting up a living trust, asset management is simplified and made much easier than if you were to draft a separate will in each state where the property resides. A living trust also helps streamline the probate process in multiple states, saving time and money. Additionally, due to the confidentiality of trusts, they can provide extra privacy when it comes to dealing with possessions in other states.
In general, anyone who has assets they want to distribute after their death, or who wants to plan for incapacity, may benefit from setting up a living trust. However, the decision to create a living trust should be made in consultation with an estate planning attorney who can help you determine the best course of action based on your specific circumstances.
Decide Whether You Require a Living Trust.
Before selecting a type of trust, consider your assets, needs, and goals. If you have large amounts of money or real estate that you want to be managed during your lifetime and distributed according to your wishes after you pass away, then a living trust is the best option.
Call Us for More Information.
Before deciding if a living trust is right for you and your particular situation, call us at 602-443-4888. We will provide more detailed information about the benefits and downsides of trusts and help you determine which type of trust will best benefit you. Our attorney can also help review the terms of your trust agreement to ensure that your wishes are properly recorded.