A living trust is a type of trust that is created and funded during the grantor’s lifetime. The grantor is the person who creates the trust and transfers assets to it. The trustee is the person who manages the trust assets and distributes them to the beneficiaries according to the terms of the trust.
Living trusts can be used for a variety of purposes, such as:
• To avoid probate
• To provide for the care of minor children or disabled adults
• To protect assets from creditors or lawsuits
• To distribute assets to beneficiaries in a specific way
Benefits of Living Trusts
There are several benefits to using a living trust, including:
• Avoid probate: Probate is the legal process of distributing a deceased person’s assets to his or her loved ones. While it is not possible to avoid all probate such as filing an estate tax return, Living trusts can eliminate the need for lengthy estate administrations because the assets are already transferred to the trust during the grantor’s lifetime.
• Privacy: Living trusts are not public records, so the terms of the trust and the assets held in the trust remain private.
• Control: The grantor has complete control over the trust assets and can specify how they are to be distributed after their death.
• Flexibility: Living trusts can be tailored to meet the specific needs of the grantor and their family.
Drawbacks of Living Trusts
There are also some potential drawbacks to using a living trust, including:
• Cost: Creating and funding a living trust can be expensive, especially if you have a complex estate.
• Complexity: Living trusts can be complex legal documents, and it is important to have an attorney help you create and fund a trust.
• Upkeep: Living trusts require ongoing maintenance, such as updating the trust agreement and transferring new assets to the trust.
Overall, living trusts can be a valuable estate planning tool, but it is important to weigh the pros and cons before deciding whether to create a trust. If you are considering a living trust, it is important to consult with an experienced estate planning attorney such as ours to discuss your specific needs and goals.