Learning About What A Living Trust Is
Whether you’re writing a blog for a living, have a plumbing company, or anything in between, learning about trust is very important. What is a living trust? Living trusts are legal estate planning tools which are detailing the way assets have to be used in case you become incapacitated or in case you pass away. At its core, a living trust has three groups: the grantor, the trustee, and the beneficiary.
The grantor is responsible with funding the trust, the trustee is managing the trust, and the beneficiary group receives the assets of the trust. The best and easiest way to learn more about the ins and outs of a living trust is by hiring a professional who will be able to answer all your question regarding the subject at hand as well as tax treatment.
Differences From A Will
A living trust and a will are fairly similar, both of them establishing the procedures that would be set in motion in order to distribute your assets after your death. The difference is in how the two are executed. A will dictates how the executor will handle the distribution after your passing, while a living trust will allow you to place various assets under a trustee’s management.
These assets are protected during your lifetime, and then can be transferred to beneficiaries. A living trust will enable you to see how the trustee is managing the assets while you’re alive. Moreover, if you’re opting for a living trust, the descendants won’t have to go through the probate process, meaning that the assets will get to them virtually right away (or on a set date), whereas a will has to go through the process and could end up being contested.
5 Benefits of A Living Trust
Avoiding Probate – As mentioned in the difference between a will and a living trust, the latter doesn’t have to go through the probate process. The process is supervised by a court, and the whole thing can end up being costly and lengthy. The process might not be ideal for your loved ones to go through during emotional times, and it can end up cutting down the amount they inherit. There is no court intervention for a living trust, which means there will be no additional costs and the distribution itself will be faster.
Peace of Mind – You can’t predict how life will turn out. Without a living trust (or a will), your assets will end up being distributed according to the laws of your state, and thus certain people might be unintentionally left out. By drawing up a living trust, you can provide care for those around you, or alternatively, you can protect your assets from going to certain people. Knowing that your assets will be handled exactly as you want them to can offer you peace of mind.
Privacy – By avoiding the probate process, the distribution of your assets will not become part of public records. The living trust document is private and only involves the parties that are included in it, as opposed to a will, which will become public.
Saving Money In The Long Run – The living trust will end up costing more when it comes to the initial payment, as opposed to drawing up a will. Moreover, the process of drawing a living trust is more involved and complex, involving plenty of paperwork. However, by not going through the probate process, there are no additional expenses after your passing.
Better Control – A living trust enables to dictate how your assets will be managed in a number of situations, giving you more control over how they will reach your beneficiaries. Your beneficiaries could receive the assets right away after your passing, but you can also arrange for the payout to happen over time or if certain conditions are fulfilled.
This control over your assets can be useful when leaving them to your children in case they are not mature enough to handle them. Alternatively, if your children are old enough, you could insert certain conditions within the living trust so that the money and assets wouldn’t reach your kids in case they have a drug or alcohol problem. The trustee will be able to hold on to the assets and distribute them later on.