What is a Living Trust, and Should You Have One?

Wondering what a living trust is? A living trust is an estate planning tool that helps you control how your assets will be distributed after your death. It can help you avoid the court-supervised probate process, which allows your assets to be distributed to your heirs with minimal hassle. To learn more about what a living trust is, keep reading. It may be the best option for you to get. 

How a Living Trust Works

Living trusts can be an essential part of your estate plan. They allow you to safeguard your assets so they can be managed and distributed when and how you would like. There are two types of living trusts, revocable and irrevocable. With a revocable trust, you can name a trustee to manage the assets and property in the trust if you happen to become sick or incapacitated. An irrevocable trust means that the terms cannot be changed, and the trustee will distribute the assets according to your wishes once you’ve passed. 

When creating a living trust, it’s best to consider these steps:

• Determine if you would like to be in control or if you want someone else to act as an estate lawyer or another party. 
• Assign a beneficiary designation, such as your spouse or a family member who will receive your assets at a preplanned time. 
• Open a trust account and transfer money or property into it. This is known as funding the trust.

Advantages and Disadvantages of a Living Trust 

Below are a few advantages of a living trust:

• Avoid Probate: Depending on the size of your estate and where you live, the probate process can be long and expensive. 
• More Privacy: The probate process makes details about your estate plan public, this includes the assets you own, their value, and who your beneficiaries are. Trusts avoid the probate process which allows this information to remain private.
• More Control and Flexibility: You get greater control when it comes to deciding when the assets are distributed to the beneficiaries.
• Protect your Assets for a Lifetime: A trust can help you plan for unexpected situation such as becoming ill or incapaciatated. This just menas for circumstances where you’re unable to manage your trust yourself.

There are many more advantages to a living trust. Here are just a few examples, but along with the advantages, there also come the disadvantages.

• The Cost: A trust can be more expensive than a will 
• Ongoing Management: A trust requires more active management than a will. 
• Extra Paperwork: Trust documents are quite lengthy because they contain important details about your trust. 

What to Put in a Living Trust

Here are a few examples of what you can transfer over from a trust to a living trust. For example, the following:

• Real Estate
• Bank Accounts
• Cars
• Stocks 
• Family Heirlooms 

Many other things can be transferred over; these are just examples of a few. It’s best to note that, depending on the type of asset you’re transferring, you may need to get a new deed or title in the trust’s name, and retirement accounts do not transfer. 

How to Set Up a Living Trust

There’s a process you must follow when setting up a living trust. To start:

• Take Inventory of Your Assets: This step may include the above examples. 
• Decide on the Type of Trust: Revocable or Irrevocable.
• Choose a Trustee: You can decide who you want it to be, yourself, or you can appoint someone such as a family member or friend.
• Name Your Beneficiaries: Decide who will receive the assets.
• Draft the trust document: The trust agreement outlines all the terms.
• Transfer Assets Into the Trust: You must transfer ownership of each asset into the trust.
• Keep the Trust Updated: Review it regularly and make updates as needed. 

Do You Need to Set Up a Living Trust?

Darius Law Group will be able to help you determine if a living trust is the right choice for you. Make sure to reach out if you have any questions or concerns regarding the living trust.