The law protects those who cannot do it for themselves. One of the ways it does so is by providing a way for people to make sure that their wishes are carried out after death. This can be done through a will or a living trust. Usually, it is preferable to have both a will and a living trust. A living trust is an estate planning tool that allows you to specify how assets will be distributed after your death. This can include the management of debts, control of property, and care for your minor children. People can use the trust to prevent probate proceedings from taking place, which saves time and money on the part of family and friends. This trust can be a wise decision for older individuals who want to maintain control of their assets.
What is a Living Trust?
A living trust is a legal arrangement in which the person creating the trust, known as the grantor, transfers some or all of his/her assets into the care of another person, known as a trustee. This trust lets you be in control of your estate while still having peace of mind that it will be properly handled. It is a legal document that allows the person to specify who will be in charge of his or her assets after death
How Do I Set Up a Living Trust?
To set up a living trust, you need to create an agreement with at least one other person and identify what kind of powers you want them to have over your assets. You can appoint yourself as a trustee but someone else would need permission from the state or province where they live to take over from you if needed. You should also designate someone else who will act on your behalf. Setting up a living trust doesn’t need to be complicated. The process can be summed up in these steps:
- Determine if a living trust is right for you.
- Decide what assets will be put into your trust.
- Create the final document that will serve as your living trust and execute it according to state law.
- Implement provisions for the management of the trust, including who it is to go to and what types of distributions will occur during its lifetime, and who will take over when it comes time for you to die.
- Implement provisions that address situations such as incapacity, disability, or death before the trustee’s distribution of property is complete, etc.
What are the assets that can be found in a Living Trust?
It is important to have a living trust in place because it ensures that your assets will go where you want them to go after your death. Assets that are in a living trust are assets that we own and collect, such as;
- A house or land
- Money from savings accounts or investments
- Retirement savings
- A life insurance policy
- Children’s education accounts
- Stock options
- Valuable jewelry
- Investments, etc
What are the benefits of a living trust?
Many people use this trust because it provides the following benefits:
- You can name someone as the successor trustee to manage your property for your children or other beneficiaries after you die.
- You may avoid probate, which means your family won’t have to go through the court system to transfer ownership of your property.
- Receiving an inheritance from you could be less expensive for beneficiaries on their taxes if they receive assets from a living trust rather than from probate.
- If you own real estate in more than one state, then most living trusts avoid the need for double taxation on those properties in each state.
- It can help you avoid probate court and it makes it easier to manage property distribution.
- Absence of conflict between beneficiaries and provide peace of mind if you become incapacitated
Is a living trust right for you?
Whether or not this trust is right for you depends on your situation and goals. For example, if you have significant wealth and are concerned about potential future incapacity, then a living trust may be a good choice for you. Or if there is a home involved in the trust, making it easier for loved ones to take care of their bill payments without having to worry about losing their home in foreclosure because of a missed mortgage
Conclusion
A living trust is a legal agreement where you transfer your assets to someone else to manage them for you. The assets are transferred during your lifetime, so the assets will still have value when you die. The person managing the assets can be one or more people, and this can depend on how much power and control you want them to have over the trust. If it’s just for a few years until your children are old enough, a family friend may be able to handle it. But if you want someone to inherit the trust and manage it indefinitely, then perhaps a professional like an accountant or attorney might be able. It can benefit both you and your loved ones in many ways, providing peace of mind if anything happens that leaves you incapacitated.
