A revocable living trust or a living trust is customized to fit the unique circumstance of the creator during and after his/her life. A living trust effectively spells out the estate planning objectives of the trustor and helps determine where the assets go when the grantor passes away or becomes incapacitated. In the case of death or in the event of lifetime disability, the successor trustee (manager of the living trust) is able to administer the trust and effectively distribute the trustor’s assets to the appointed beneficiary. A revocable living trust gives the trustor wide flexibility and comfort for the reason that it evades probate procedures, protects assets and privacy, aids in distributing assets, and effectively divides assets and properties at the time of death. Here, we discuss the 5 most common reasons to make a living trust.
Establishing a living trust is beneficial because it can help one evade the time-consuming and costly probate procedures. Probate is a legal process that determines the eventual heirs of a deceased person’s estate. A deceased person with assets over $150,000 that did not establish a Living Trust during his/her lifetime will be subject to probate administration. The court-supervised probate process does not guarantee that one’s intended beneficiary (person who benefits from the trust) will receive the allocated assets. Establishing a living trust will guarantee that the decedent’s bank accounts, investment accounts, real estate and business interests are transferred to the determined successors and beneficiaries. A trust agreement effectively reduces or eliminates probate costs all together because it changes the title of assets to the name of the trust.
Living Trusts are typically private documents therefore there aren’t any public records of them. A deceased person’s estate will become public knowledge during the probate process. The terms of a living trust remain private thus available only to those who are named in the estate planning documents. When an individual establishes a living trust, the initial and successor Trustee (manager of the living trust) are granted the ability to administer and manage assets without court interference.
3.Manage Your Assets
A living trust can dictate how one’s assets are managed upon the death or in the event of lifetime disability. When the grantor (the person funding the trust) dies, becomes disabled or incompetent, the person which the initial trustee has designated will be become responsible for administering the trust. This transfer is smooth and does not require court supervision. A revocable living trust allows for the trustor to amend and revoke the trust agreement at any time until the he/she dies.
4.Protect your Assets
It takes a lifetime to acquire and maintain assets therefore safeguarding them is just as important. Establishing a living trust provides asset protection for the surviving spouse, if necessary. The advantage of a trust is that assets transferred into a revocable living trust which will not create a break in continuity. The living trust will remain “alive” even after the trustor dies which makes the transfer of assets to the beneficiaries easier without any probate court costs or delays.
5.Dividing Assets and Property
A revocable living trust guarantees that the designated beneficiary which will without court interference. The trust terms indicate what must be done when the grantor dies, becomes disabled or incompetent. The named successor trustee is responsible for distributing the deceased person’s property to the beneficiaries named in the trust documents. The assets are privately distributed according to the terms of the living trust which reduces the chance of a family feud.
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Please note that this blog post is not legal advice and does not create an attorney-client relationship. It should not be used as legal guidance and has been posted for marketing purposes only.