A living trust can be a practical and versatile addition to an estate plan that can help a person achieve more estate planning objectives. Unlike a Will, a living trust comes into effect during the lifetime of a person who creates it even though its provisions are designed to secure the interests of the person’s family and estate after their passing. In this article, we will explain how a trust is created, the difference between irrevocable and revocable living trusts, as well as some of the benefits of creating one.
How to Create a Trust
The first decision you need to make if you’d like to create a trust and you’re married is whether to create a joint trust with your spouse. Such trusts can include the assets you own separately as well as any joint property. Next, you need to make a list of your assets and property along with their values. You will probably have to find a professional appraiser to help you correctly estimate the real market value of your tangible assets. You should also be aware of the money gathered on various bank accounts – such as current savings or retirement accounts – and insurance policies. Once you’ve reviewed all your assets, you can choose what you’d like to include in the trust.
Next, you will need to appoint a trustee and the beneficiaries of your trust. A trustee is a person who manages and protects the assets in the trust. If you’re creating a living trust, this person may be you. In this case, you will also need to appoint a successor trustee – a person who will manage the trust in the case of your death or incapacitation and make sure that the assets in the trust will make their way to the beneficiaries. A beneficiary can be either a person or an organization – for example, a charity – that will inherit some of the assets or property contained in the trust.
Since laws and regulations related to trusts are complicated, it’s best to ask an estate planning attorney to help you draw up a trust. That way you will make sure the document is carefully designed and legally valid and that your wishes with regards to your assets and estate will be respected after your passing.
Revocable vs. Irrevocable Trusts
A revocable living trust is flexible in the sense that the arrangements and the makeup of the trust can still be changed or adjusted later on according to the trustor’s wishes. This means that a trustee or beneficiaries can be changed and that assets can be either added or subtracted from the trust. A revocable trust can even be completely dissolved. An irrevocable trust, on the other hand, cannot be easily subjected to such changes or adjustments.
Advantages of a Living Trust
As mentioned above, organizing assets in a living trust provide many estate planning benefits that a Will by itself is legally unable to guarantee. Some advantages include:
- assets in a trust avoid probate
- if named beneficiaries of a trust, surviving family members can obtain almost immediate access to their inheritance
- a trust can help avoid guardianship or conservatorship proceedings
- a trust can guarantee the privacy of the inheritance proceedings
- organizing assets and property in a trust can help avoid estate taxes
Thinking About a Trust? Consult an Estate Planning Attorney
Despite clear advantages, a trust isn’t a one-size-fits-all estate planning tool. It may be beneficial for some estates while unnecessary for others. Before making a decision to create a trust, you should obtain and carefully consider the advice of an experienced estate planning lawyer. Our attorneys at Luis E. Barreto & Associates, P.A. will analyze your circumstances and help you find an estate planning solution tailored to your personal needs. Contact us today to schedule a consultation.
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