Question: What is a Living Trust?
Answer: A Living Trust is a legal instrument set up to transfer your property out of your name and into a trust. There are different types of living trusts and the most widely used is the revocable living trust, which leaves you in control of your assets through the life of the trust or until you die.
A revocable living trust is called " revocable" because it is set up during your lifetime and you can revoke it whenever you desire.
Since wills have to be probated and because of the amount of time and money involved in court proceedings, a living trust is used by many people to avoid the probate process.
In essence, your assets are passed directly to your beneficiaries without the need to go through probate.
With the living trust, you can name yourself as the trustee or someone else as co-trustee, such as a spouse or child. You can also name a bank, a financial advisor, or a trust company, as trustee or co-trustee, to handle the assets listed in your trust.
By making yourself the trustee of the living trust, you can make changes any time you desire.
If you become disabled, a co-trustee can make necessary decisions concerning the trust, such as selling property and liquidating other assets.
In the living trust, you can determine when and how your assets are to be divided amongst your beneficiaries. For example, if you do not want your child or children to get all of what you are leaving them at once or if you don't want them to have it until a certain age, you can spell it out in the trust.
You can name your living trust to be the beneficiary of your insurance policies and leave instructions to the trustee as to how it is to be used upon your death.
The living trust does not prevent inheritance or estate taxes. If there is income made by the living trust, you are still responsible for any taxes that are due.
•Although living trusts are relatively easy to prepare, you may still want to seek the expertise of an attorney or a professional paralegal service that is knowledgeable about wills and trusts.