There is no doubt that trust is an essential part of estate planning. Many of your problems will be gone if you have trust beforehand. Though trust has almost magical power, it is important to know the difference. Different trusts serve different roles. For instance, living trust and testamentary trust are both very significant trust, but their implication is very different.
living trusts can make one’s estate planning job easy. Though people usually understand its basic concept, very few know what it actually does. Here are some of the pointers about the things you can do with a living trust.
What is Living Trust?
A living trust simply means a trust or legal document that is created during the lifetime of a person. With the living trust, an individual designates a person (trustee) to manage his/her asset for the benefit of the subsequent beneficiary. It is also known as “inter vivos” trust.
There are basically two types of living trust-
- Revocable trust: Living trusts that can be changed or eliminated according to the wish of the trustors are called revocable trust.
- Irrevocable trust: These living trusts can’t be altered or canceled once it gets done.
Why is Living Trust Important?
living trusts are especially for estate planners. Here’s why this trust can be very important for you-
Estate Tax can be Reduced
If a married person creates and funds a revocable living trust and all of the properties holding in the trust pass to his/her spouse, then it will not be subject to estate tax. On the other hand, if someone names both his/her spouse and children as the beneficiaries, then the tax will be exempt only for the spouse. The portion of the properties passing down to the children will be subject to estate taxes.
Help to Keep Assets in the Family
Your properties can pass down to a non-relative through marriage. You may not like the idea. If you don’t want to wind up giving your properties to your ex-son-in-law or someone like him, you need to create a living trust.
Living Trust Protects Your Minor Children
If you become a father at a relatively old age, it’s very logical to fear that your properties may not hand down properly to your children. Then you should hold the money/property to trust for them until they come to the right age.
Avoid Probate
Probate might be the last thing you want for your properties to happen. It means that your property’s distribution will be done by the estate. Instead of relying on will, if you put your properties in the living trust, you can easily avoid probate.
Protect Your Family’s Privacy
No one likes the idea that his/her property becomes a matter of public record. It’s not a pleasant experience. So, how can you avoid it? Well, creating living trusts can protect your privacy as these are a private document.
Save Your Grown-up Children from Spoiling Assets
It’s very sad if your properties get all spoiled by your children who have drug or alcohol issues. If you think something like this could happen, it’s better to put your assets to a living trust. This way, you may refrain your children from abuse and save your assets at the same time.
Managing Property upon Incapacity
If you have no children, then you should create a inter vivos soon. With a trust, you can make sure how your assets will be spent when you are gone. You shouldn’t leave it to be done for the future. Because if you become incapacitated, there is no way to manage your assets according to your will.
Final Thought
If you plan to do estate planning, you need to know more about living trusts. It can make your job very easy. You can easily avoid tons of trouble if you create a living trust beforehand. It is more effective and at the same time, less expensive. The great thing about creating this trust is that you can avoid probate or court by doing it.
If you still have questions, you can contact our legal experts. We will try our best to satisfy your queries.
