A living trust is a highly effective planning tool. Depending on your needs and the size of your estate, a trust can be simple or incredibly complex. Regardless, if you do not currently have an estate plan in place and would like to know if a trust is appropriate for you, read on to better understand what a trust is and what it can do.
What Is a Living Trust?
A living trust is an estate planning tool that many people use instead of a will. A living trust allows you to transfer ownership of your assets to the trust while still benefiting from the assets during your lifetime. Then, at the time of your death, your assets are distributed to your designated beneficiaries.
If you decide to establish a trust, it is important to look at your estate and planning goals. You may setup a revocable or irrevocable trust. A revocable trust can be altered and changed fairly easily, while an irrevocable trust is designed to be unchanged. You may need a special needs trust if you are thinking of leaving money to a disabled child or adult. It is important to consult with an estate planning professional to find the appropriate trust type for your long-term needs.
What Happens to a Living Trust After Death?
When you go through steps to set up a living trust, you will appoint a successor trustee. While you are living, you are the designated trustee of your estate; at the time of your death, your successor trustee will take over. It is the successor trustee’s job to oversee the trust and its disbursement. This means he or she must pay any necessary taxes, file a final tax return and make sure that the assets are distributed to the designated beneficiaries. Once all of those steps are completed, the trust is closed.
Living Trust vs. Will
A living trust has many benefits. The first, and most well-known, is that having a living trust allows your estate to avoid probate. If you have a will in place at the time of your death, the will may need to go through a court process called probate.
Because your estate goes through the courts in the probate process, all the bequests and details of your will become part of the public record. With a living trust, your successor trustee and beneficiaries are the only people privy to the details of your trust. Your heirs and estate information remain private and unavailable to the public.
How Do I Establish a Living Trust?
Consult With an Attorney
First and foremost, work with an experienced attorney. Make sure that a living trust is the best choice for you. Discuss with your attorney your goals and current assets. Make certain that you understand the plan put forth by your attorney and don’t be afraid to ask questions.
Living Trust Forms
Once you and your attorney have decided that creating a living trust is in your best interest, the next step is the paperwork. Your attorney will have many questions and there will be forms that need to be completed in order to execute a correct, legal document.
While there are many low-cost online options, an improperly executed trust document could be found null and void by the courts and negate all of your hard work. A qualified attorney is going to be the best person to assist you in drawing up the correct documents and ensuring everything is up to legal standards.
If you or a loved one are considering a living trust, allow me to review your needs. I would be happy to help you execute the best plan possible for your estate and your loved ones.