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. A revocable living trust is gaining in popularity due to advantages such as the avoidance of probate, privacy, lifetime control and post-death cost. 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. Below is a summary of six key things to know about living trusts.
- 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.
- 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 your assets to be allocated to beneficiaries in pre-designated amounts and time frames.
- 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. A will is less expensive to create now, but may cost your estate more in the long run; a trust is more expensive to create now, but should allow for a more efficient distribution of assets post death.
- Who should be the trustee? Someone you trust. Typically, the initial trustee should be the creator (you), a spouse, a close relative or a trusted legal or financial advisor. Children are sometimes named as successor trustees. The trustee must be a mentally competent adult.
- 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.
- Do I need an attorney to prepare a living trust? No, but you should have an attorney to help you discuss, draft and finalize the trust. If you do choose to draft the trust on your own, then it is wise to at least have an attorney review the final documents to ensure the trust is accomplishing the objectives you are seeking.
For assistance with creating a revocable trust, or with any other legal needs related to your business or estate planning, contact Fournier Legal Services at 860.670.3535 or firstname.lastname@example.org now for a free consultation and planning session.