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If you’ve been thinking about estate planning, you may have heard the term “living trust,” but aren’t sure what it is or how it works. Below is a brief overview.
When you create a living trust, you essentially place all your assets into a trust and make yourself the trustee. This means that your assets are owned by the trust but controlled by you. You also appoint a successor trustee to take over once you pass away or become incapacitated. Until such time as you are no longer the trustee, the trust is revocable, meaning it can be changed or revoked. It only becomes irrevocable when you no longer have control over it.
The Benefits of a Living Trust
In some ways, a living trust is like a will, in that it provides guidance for what should happen to your assets when you pass away. But when written correctly, it confers other benefits as well, including:
- Ensuring quick distribution of your assets
- Minimizing tax liabilities for those receiving your assets
- Keeping your wishes from becoming publicly available information
- Giving you control over your assets while you are still alive and able to enjoy them
As with any legal document, a living trust is only valuable if it is well-written and enforceable. That’s why it is important to work with an experienced attorney when creating any estate planning documents.
Work You Can Do Before Creating The Trust
Here are basic steps you’ll need to take in order to create the trust. Some can be done on your own. Some will best be completed with the guidance of a lawyer. Steps include:
- Making a list of all your assets (liquid and illiquid)
- Collecting all paperwork related to those assets (deeds, insurance policies, stock certificates, titles, etc.)
- Deciding who your beneficiaries will be (and for which assets of asset amounts)
- Choosing an appropriate successor trustee
Your successor trustee will have many of the responsibilities that an estate executor would. He or she will need to distribute assets and pay debts, and handle your affairs if you become incapacitated.
Working With an Experienced Attorney
A living trust is powerful on its own, but it functions most effectively as part of a comprehensive estate plan. No matter what your age or how wealthy you consider yourself to be, you have assets that deserve to be protected, and it’s never too early to get started.
Hiring an experienced estate planning attorney can make the process considerably easier, faster, less stressful and more impactful. Do-it-yourself forms printed online may save you money initially, but these documents are not customizable and could lead to expensive hassles and confusion for your family members after you pass. Therefore, saving money now could end up costing more later.
To learn how our firm can help you create a living trust and meet all your other estate planning goals, contact a lawyer, like the best trust lawyer, to set up an initial consultation.