For people who want to be in control of their assets while they are alive, a living trust is a good solution, and it also works after they have passed. There are other types of trusts that may be more appropriate.
A recent article from The Street asks, “What Is a Living Trust and Why Should You Have One?” The article explains that a living trust primarily helps individuals keep more control over their assets and have their instructions carried out after they pass away. A living trust can help save the costs and delay of probate—that can take up to three years and 10-15% of an individual's estate's value. Since you don't have to register a trust with the courts, creating one up can also provide you with more privacy than a will.
A trust provides flexibility and creativity, as well as the level of control over funds passed to heirs that a will alone might not. For instance, a parent leaving money to a child could leave that money with a third-party to be given to the child at whatever age the parent decides, or on specific birthdays. A trust can also protect the assets from bankruptcies and lawsuits.
There are many forms of trusts, all of which can be set up easily with the help of a qualified estate planning attorney. Here are the primary types of trusts:
A revocable trust enables an individual to keep control of assets, while she’s still alive. The trust assets can be moved around, and it’s pretty flexible in its structure. It can be modified at any time, and it can be revoked at any time.
An irrevocable trust can’t be changed and can’t be revoked. Any assets included in an irrevocable trust can't be accessed by creditors. An irrevocable trust provides protection from lawsuits and provides solid asset protection.
An asset protection trust helps protects the trust holder's assets from any future efforts by creditors to get hold of an individual's assets. These trusts can be established for a specific amount of time, and all assets in the trust that remain are returned to the trust holder when the trust term expires.
A charitable trust is established to benefit a particular charity or charities. These trusts provide an outlet for an individual's favorite charities and causes, and they provide significant tax benefits for the trust holder because they help lower or eliminate estate and gift taxes.
With a trust, you'll bypass probate and save on those expenses. You'll also have peace of mind because a living trust can eliminate much of the stress over how your estate will be handled after you're gone. It provides clear direction on how your assets will be distributed.
Talk with an estate planning attorney about how a trust might be useful for your estate, and which type. Remember that trusts are not do-it-yourself projects, since there may be unforeseen tax implications when property is placed in a trust. Work with an experienced trusts and estate attorney. Feel free to contact us today.
Reference: The Street (October 1, 2018) “What Is a Living Trust and Why Should You Have One?”