As you start to consider your estate planning options, you may have heard that a “living trust” could help you protect your assets. But what exactly is a trust, and how can it help protect you and your family’s assets?
What Is a Living Trust (and Who Should Get One)?
A "living trust" can refer to any trust that you create during your lifetime. You may also hear it referred to as an "inter vivos" trust. The trust holds property or assets and is managed by a trustee, usually you (during your lifetime) or someone you have appointed. A trust is created with a notarized document that lists the property to be included, names of trustees, and the name of the person (called the beneficiary) who gets the property after death. Living trusts can be revocable or irrevocable. Revocable living trusts can be amended or revoked by the originator of the trust (called the Grantor or Settlor) at any point during Grantor's lifetime.
You may want to consider setting up a trust if you:
- Avoiding probate. The most common reason to create a trust is to avoid probate, which can be a lengthy and expensive process of transferring assets through the court. Property that is listed in a living trust can pass to beneficiaries without going through probate, but only if it meets certain requirements. An estate planning attorney can help you ensure that your assets will be transferred without probate.
- Have minor children. Minor children may not be able to directly inherit some kinds of property, but a trust will allow you to keep those assets secure until the child is old enough to receive them.
- Have a dependent with special needs. A Special Needs Trust Supplemental Needs Trust can provide your children, grandchildren, or other dependents with guaranteed resources after your death. If properly structured by an experienced attorney, these types of trusts will have the added benefit of the income not counting against them when calculating any disability benefits.
- Want to leave a portion of your assets to charity. A revocable trust can establish a fund or donation that will go to an organization, foundation, or institution upon your death. While you may include such a provision in your will, a trust will ensure that the money is donated without being challenged or re-appropriated by family members.
Is a Living Trust more beneficial than a Will?
A living trust should be maintained during your lifetime in order to continue to be legally binding. However, the creation of a will may not exclude your assets from the costs of probate, does not provide for you if you become incapacitated, and does not offer irrefutable assistance for your loved ones like a trust can. To learn whether your spouse or family members could benefit from a revocable trust or other planning methods are beneficial for you, fill out the short contact form on this page to share your questions and concerns with our estate planning team.