Summary: Living Trusts can provide some important benefits to both the Grantor and beneficiaries, including control over assets, avoidance of probate, creditor protection, and privacy.
A Living Trust is a type of estate planning tool that provides some important benefits to both the Grantor and his or her beneficiaries. To establish a Living Trust, the Grantor first creates the trust during his or her lifetime (hence the name Living Trust) and then places assets into the trust. The Grantor maintains control over the assets during their life, and then anything remaining after the Grantor’s death is transferred to the beneficiaries. While trusts can be designed with a variety of goals and features, Living Trusts, in particular, have a few desirable aspects.
Revocable Living Trusts allow the Grantor to maintain control of his or her assets. If a trust is revocable, that means that the Grantor can abolish the trust and take back personal ownership of the trust property. Typically, revocable trusts also allow the Grantor to change the terms of the trust. In other words, the Grantor can sell the trust property, add assets to the trust, change the beneficiaries, or even eliminate the trust altogether. The Grantor remains in control. Living Trusts also provide for a backup trustee who can manage the assets if the Grantor becomes ill or incapacitated and who takes charge of the trust when the Grantor dies.
Living Trusts can hold assets for the benefit of others, especially the Grantor’s children. When the Grantor creates a Living Trust, he or she can decide who receives what assets, on what time table, and under what circumstances. Grantors can specify that certain assets are held until their minor children reach a certain age or are mature enough to handle the money. A Living Trust can also hold funds for children who are unable to manage money, either due to health problems, financial issues, or for other reasons. In those circumstances, a trustee can help manage the assets in the Living Trust and distribute the funds to the beneficiaries as needed.
A Living Trust, unlike a will, enables an estate to avoid probate. With a Last Will & Testament, when someone dies, his or her assets will go into probate, which is the legal process during which a court supervises the distribution of assets (also known as an estate). The probate process can be lengthy, expensive, and stressful. If a Grantor puts assets into a Living Trust, the paperwork is already done and the Grantor’s property can be distributed without the oversight of the court. This means that assets held in a trust can be transferred to the beneficiaries more quickly than if they needed to go through probate.
Assets held in a Living Trust can provide creditor protection to beneficiaries. When assets are placed into a Living Trust, the trust can be structured so that it is very difficult, if not impossible, for creditors of beneficiaries (including ex-spouses) to access the trust property.
A Living Trust is private. With a will, which becomes public when probated, anyone can look up the paperwork to see how much a person’s estate was worth and what funds went to which beneficiaries. A Living Trust, alternatively, is a private document. By creating a Living Trust, the Grantor can help ensure that his or her family’s information stays private.
These benefits are some of the primary reasons to include a Living Trust in your estate plan. If you have additional questions about Living Trusts, or about trusts in general, please contact Siedentopf Law at (404) 736-6066 or via our online form.
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