Do I Need a Living Trust?
A comprehensive estate plan will typically incorporate a wide variety of estate planning tools and strategies into the plan in order to accomplish the plan’s goals and objectives.
What Is a Trust?A trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a Settlor, also referred to as a Grantor, Trustor, or Maker. The Settlor transfers property to a Trustee who then holds that property for the beneficiaries named in the trust agreement. The beneficiary of a trust may be an individual, a charity or organization, or even the family pet. Moreover, a trust may have current and/or future beneficiaries.
Are There Different Types of Trusts?All trusts are categorized as a testamentary trust or a living trust. A testamentary trust is one that does not become active until the death of the Settlor. Typically, a testamentary trust is activated by a provision in the Settlor’s Last Will and Testament. A living trust, formally known as a “inter-vivos” trust, activates as soon as all the formalities of creation are complete, and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts. As the names imply, a revocable living trust can be revoked or terminated by the Settlor at any time and for any reason whereas an irrevocable living trust cannot be revoked or terminated by the Settlor after the trust becomes active.
Why Might I Need a Living Trust?A living trust can help achieve a wide range of estate planning goals; however, some of the more common uses for a living trust include:
• Avoiding probate
• Incapacity planning
• Asset protection
• Charitable gifting
• Medicaid planning
• Protecting the inheritance of minor children
• Special needs planning
• Pet planning
How Does a Living Trust Help My Estate Avoid Probate?Your Last Will and Testament must go through probate. That means that assets gifted in your Will must wait out the probate process before being distributed. On the other hand, a trust does not go through probate. Therefore, assets distributed using a living trust can be distributed to beneficiaries outside of the probate process.
Do I Need an Attorney to Help Me Create a Living Trust?In today’s electronic age it can be tempting to use the internet to locate “Do-It-Yourself” legal forms. Without the advice of an experienced estate planning attorney, however, when creating a living trust the likelihood of ending up with an agreement full of errors and omissions increases considerably. That, in turn, increases the likelihood that your trust will become involved in costly litigation. Moreover, even a relatively minor mistake or ambiguity in a trust agreement can lead to a complete failure of the trust, ultimately putting the trust assets at risk and leaving the beneficiaries with nothing.