For some people, a living trust can be an incredibly useful way to organize their assets as part of an estate plan. Not only is it an effective means of distributing your assets, but it can potentially have significant tax benefits and offer other useful protections. But what is a living trust, exactly, and what role can it play in your estate plan?
What is a Living Trust?
In simple terms, a living trust is an arrangement where a person, known as a grantor or trustor, places their property in the care of another person, known as a trustee. The assets in the trust are place there on behalf of a beneficiary. Unlike other trusts, where the beneficiary may be a third party (such as a child of the grantor), the beneficiary of the living trust is the grantor themselves. In addition, this type of trust is revocable, meaning it can be freely modified and property can be put in or taken out without needing to go through any additional legal processes.
How Does a Living Trust Work?
When money or property is placed into a living trust, it is maintained and managed by the trustee on behalf of the grantor, who is also the beneficiary of the trust. However, when the grantor passes away, the trust becomes an irrevocable trust, with the property distributed to the grantor’s beneficiaries named in the trust document. This happens automatically, meaning there is no additional work that needs to be done to transfer property from the trust to the grantor’s heirs.
What Role Can it Play in Your Estate Plan?
In theory, a living trust can have many of the same functions as leaving property in your last will and testament, allowing you to leave your assets to your loved ones. However, it has the added benefits of being considered non-probate, meaning it avoids much of the hassle and costs associated with probating a Will. It may also protect against certain taxation. Thus, in many cases, a Living Trust can either supplement or replace a more conventional Will.
What Should You Do?
Ultimately, determining whether a living trust is right for you is dependent on your personal circumstances. That is why you should speak with a lawyer experienced in estate planning and other estate law issues. A lawyer can review your plan and ensure that all of your interests are protected, so your wishes will be respected when you pass away.
If you or a loved one are dealing with legal issues related to Trusts and Estates, or you are dealing with any other issue related to elder law, you will need specialized legal advice. The attorneys at Hobson-Williams, P.C. are skilled in all aspects of elder law, and are dedicated to representing clients with diligence and compassion. To speak to an attorney or to schedule a consultation, call 866-825-1LAW.
