What Is A “Living Trust”?
A living trusty, also called a “revocable trust,” is a document that can help you reduce the effect of probate on your beneficiaries or, even better, avoid probate completely. Via a living trust, the grantor, the individual creating the trust, transfers the possession of the assets included in the document, such as property, tangible goods, and intangible assets, to a beneficiary declared in the trust. Examples of assets you should consider placing into a living trust include real estate, stocks or mutual funds, and bank accounts.
There are different types of living trusts, but the two main are the revocable and irrevocable trust. In an irrevocable trust, you are unable to modify the terms , or do anything without the Permission of the beneficiary or beneficiaries. In a revocable trust, you are able to alter it or cancel certain things. In the revocable trust, income that is earned is distributed to the grantor, and upon death the beneficiaries then get the divided property. Having a properly drafted living will allows you to avoid probate, control the division of your property, and prevent your financials from being a public matter.
What Are The Benefits Of Writing A Living Trust?
In New York, as well as in other states, the grantor can declare himself to be the beneficiary of his own living trust. The keyword is “living,” so the trust goes into effect before the grantors death, and thus all of the assets written into the trust are fully accessible during the lifetime of the grantor. In such a way, the grantor can continue using the assets in the trust of the lifetime beneficiary and, upon death, have them immediately transfer over to the surviving beneficiaries by designating them as remainder beneficiaries when drafting up the document. In the event that you decide to amend a living trust, you merely need to meet with a qualified attorney to write up the changes you desire to put in place, and the desired amendment will go into effect once signed into action.
There are major advantages to having a living trust, some of these advantages include the money and time that you save in the probate process. With your living trust once you pass away all your costs like the funeral and the distribution of affairs to heirs, will begin. This saves time and cost. Another major benefit of a living trust is a stronger level of protection if it is challenged by anyone in the court. One last advantage is the protection of privacy. Compared to a will which is a public document which can be obtained from county records, a living trust is private and no one has access to the detailed information you have disclosed.
How Do Living Trusts Avoid Probate?
For many Americans, a significant goal of estate planning is to avoid probate. A revocable living trust, unlike a will, offers a fast, private, probate-free way to transfer one's property after death. Although a living trust is not a complete substitute for a will (it doesn't allow you to name a guardian for a child, for example), it is definitely a more efficient way to transfer property at death, especially large-ticket items such as a house.
Do I Need A Living Trust
It’s important to have a living trust because it can help avoid probate and administration proceeding. If you have a home that you use for vacation, putting it in your living trust allows it to be safe from probate as well. It is also a good idea for those who want to leave something for more than one child to inherit. You can tell whether or not you would need a living trust by weighing the size of your assets. If you don’t own a lot of property or if you don’t have anyone to inherit your property, it may be best to just have a will.