What Is a Living Trust?
You may have received a flier inviting you to a free talk or an email announcing a lunch seminar to inform you about setting up a living trust. But what is a living trust? And do you need one?
First thing's first, here are the basics on what a living trust is and its features:
- A living trust is a written, legal document that transfers title to a person's property to a trust immediately -- during the trust creator's lifetime -- to be managed by a trustee.
- The trust creator can name themselves as trustee during his/her lifetime.
- A living trust can generally be revoked or amended at any time during the trust creator's lifetime.
- A living trust is written to benefit named entities--beneficiaries--such as individuals or non-profit organizations.
- A living trust avoids probate costs and allows greater privacy in asset distribution.
- A living trust names a trustee who will manage the assets of the trust following the trust creator's death or in the event the trust creator becomes incapacitated
- Living trusts provide instructions to trustees on how to manage the assets held in the trust and how to distribute them to the named beneficiaries.
Does Everyone Need a Living Trust?
Probably not. The living trust is useful tool for those individuals with significant assets, who want to retain greater control in handling of assets, and who want greater transparency in the distribution phase. If an individual does not have a living trust or will, on their death their assets will follow probate laws in distributing assets.
Attending a talk or seminar to learn more about living trusts could be helpful and informative. But before you sign the dotted line to establish a living trust for yourself, be sure to consider your economic situation, any complexities in managing the trust, and who the trust will benefit. If your assets are basic and management and distribution are straightforward you may decide to opt out of setting up a living trust or set one up yourself.
Related Resources:
- Living Trusts (FindLaw)
- Living Trusts Scams: Seniors Should Beware (FindLaw's Common Law)
- A Primer on Living Trusts - a popular way to avoid probate (FindLaw)
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