What is a Trust?
A living trust – an inter vivos trust if you want to be formal – allows you to put your assets in a trust while you’re still alive. If your living trust is revocable, as almost all are, it gives you great flexibility. You or someone in whom you have confidence manage the property, usually for the benefit of you or your family. Most people name themselves as trustees, and find there is no difference between managing the trust and managing their own property — they have the right to buy, sell, or give property as before, though the property is in the trust’s name rather than their own.
Advantages to a Living Trust
A Living Trust helps in managing your affairs. A living trust provides a way to care for you and your property in case you become disabled. You’d typically set up a revocable living trust, fund it adequately, and name a reliable alternative trustee (often an adult child) to manage it should you become ill. This avoids the delay and red tape of expensive, court-ordered guardianship. And at the same time the trustee can take move any duties you had of providing for other family members.
Of course, living trusts can help even if you’re not disabled. For example, if you have a trustee, a living trust can manage your property. Say you rent out condos; your trustee can take over the management, while you receive the income, minus the trustee’s fees.
PROTECTS YOUR PRIVACY
A Living Trust is a private document that allows you to pass assets after your death without having to file any documents with the court that become public record. In many cases, Probate requires a full inventory and accounting of all Real Property, Bank Accounts, Retirement Assets, and other Personal Property be filed with the court. This all becomes public record once it is filed with the Probate Court.
Probate is a long process that can take 18 months or longer. Many people think Probate takes 6 months, however, that is the length of time it has to run in a local newspaper for what is called the Notice to Creditors. The will is filed in Probate court and becomes public record for everyone to see. A Trust remains private, and allows assets to pass quickly without the need of probate court or public record.
A Living Trust is easy to Create and More Flexible than a Will
Living trusts give you wide flexibility in distributing your property. For example, the trust agreement could say “at my death, my trustee is to give my car to my son Cain, my home to my son Jacob” and so on. Your instructions can tell the trustee to continue managing assets for the benefit of someone else, distribute them to any beneficiaries you choose, or to perform some combination of these actions.
And, unlike a will, you can use your living trust to make gifts over a period of time. In fact, living trusts can extend long after you die. If you want the trust to benefit your infant grandchildren, for example, you might specify that the trustee make gifts to them as needed until they are fully-grown.
For most simple estates, it’s not that hard for a lawyer to create a living trust tailored to your estate objectives and you don’t’ have to go through the formalities required to execute or change wills. A Trust can be completed in just a few meetings with an Estate Planning Attorney.