What is a living trust?
A living trust is an entity created during the Grantor’s lifetime to hold and manage assets. When someone creates a living trust, they are known as the “Grantor”. After the Grantor’s death, the assets can be distributed directly to the Grantor’s beneficiaries without having to go into probate. There are two types of living trusts:
- Revocable: A living trust can be revocable, which means assets are transferred into the name of the trust, but the Grantor retains the title and ability to alter them. A revocable living trust can be changed or revoked right up until the Grantor’s death. Revocable living trusts are the most common.
- Irrevocable: A living trust can also be irrevocable, meaning the Grantor relinquishes all their control and interest in assets to the trust. Once the trust retains title to the assets, the Grantor can no longer change or revoke anything.
Who manages a living trust?
Trustees are in charge of managing the living trust. When the Grantor is alive, they may serve as the Trustee. After the death of the Grantor, another person or entity will serve as the Trustee. It is important for the successor Trustees to understand what the Grantor’s goals are, so they can successfully manage and administer the trust.
Why create a living trust?
There are many benefits to having a living trust, including the following:
- Avoid Probate: Unlike a will, living trusts are not subject to the legally lengthy and often expensive probate process.
- Less Stress: Avoiding probate will relieve your loved ones of undue stress during what will already be an emotional time.
- Successor Trustee: You (as opposed to the court) have the authority to name the person(s) who will be in charge of your estate after your death.
- Incapacity: You (as opposed to the court) have the authority to name the person(s) who will act for you in the event you are incapacitated.
- Privacy: When a will goes through probate, it becomes a public document. Because a living trust does not go through that process, it protects your assets and wishes from becoming publicly accessible.
There are many benefits to having a living trust in place, ultimately it is up to you to decide what is best for you and your loved ones.
How do I make a living trust?
If you’ve decided a living trust is the right option for you, you will need to hire an attorney. Cheaper online methods of creating a living trust do exist, but hiring a professional is the best way to ensure that: 1) your assets are truly protected, 2) the trust follows current law, and 3) that your wishes are carried out legally and correctly. Many experienced estate planning attorneys also offer additional services like financial planning and trust administration.