A will is often an individual’s first estate planning tool, but it should not be the only item on your planning to-do list. Everyone’s situation is unique, and a final decision about whether you need a living trust should be the result of consultation with your legal and financial advisors and your loved ones; however, this article summarizes a few key items for you to know.
1. What is a Living Trust?
A trust is a written document that involves you, the creator or trustor; the trustee, who manages the trust in a fiduciary capacity; and the beneficiaries, who will benefit now or later from the trust. A “living” trust is created during the trustor’s lifetime and may be revocable, which means you retain full control over the trust terms and trust property during your competent lifetime.
2. What is the Purpose of a Revocable Living Trust?
A living trust may provide you with the peace of mind that comes from knowing that your assets and your heirs will be protected, eliminate the need for your estate to pass through a public and potentially expensive probate process, allow for your assets to pass to your beneficiaries immediately upon your death, and allow for your assets to be allocated to beneficiaries in pre-designated amounts and time frames.
3. What are the Differences Between a Will and a Living Trust?
A will takes effect upon your death, a trust takes effect upon its making. A will is subject to the probate process, which may cost money and will take place in the public domain, whereas a trust, if done properly, will remain private and avoid probate.
4. What do I have to put in a Living Trust?
You may fund your trust with as little (at least $1) or as many assets as you choose. As the trustee, you may fund, buy, sell, and/or use the trust assets just as you do today.
Joe received his law degree from the University of North Carolina–Chapel Hill School of Law and his Accounting degree from the University of Rhode Island. He is admitted to practice law in Connecticut, Massachusetts, and Rhode Island, and he is a CPA. He is an Adjunct Professor and lecturer at the University level and has been a frequent speaker on business planning and legal matters.