As you get older, it’s important to start thinking about how you plan to pass on your estate to beneficiaries once you’re gone. Some plans are simple, direct transfers of funds to beneficiaries, but these can have pitfalls that make them vulnerable to external factors. A living trust can be used to protect your assets throughout your lifetime, making the transition to loved ones and friends easier in the future.
Living Trusts
The definition of a living trust is a legal document that places someone’s assets in the hands of a trustee. That trustee is responsible for managing the estate until it is time to pass it to the beneficiaries. They are called “living” trusts because they are made while the creator is still alive. An advantage to living trusts is that the estate becomes exempt from going through probate. Probate is the process of verifying a will and determining who receives what. It can be expensive and exhausting, so leaving your assets in a living trust can spare your beneficiaries that hassle.
Revocable Trusts
The term “revocable” establishes extra guidelines for the trust. It means that the creator has the option to change the trust whenever he or she wishes. This allows flexibility for changes that occur in the family in the time after the trust is established. If one beneficiary falls out of favor, they can be removed from the trust without consequences. Irrevocable living trusts do not allow this without the consent of everyone included in the trust.
The Trustee
The trustee is the one assigned to handle the trust, and it can be anyone. It is usually the creator of the trust if they are still alive and of sound mind. If the trustee becomes mentally incapacitated, it is possible to make someone else the new trustee to carry out affairs while the creator is still alive.
Establishing a Trust
To create a revocable living trust, you’ll need to do most of the hard work at the beginning. This includes tallying up everything you own in an inventory and determining who you want as beneficiaries. Once you’ve made the list, you’ll need to contact the right sources to transfer those assets into the trust (such as insurers and banks).
If you aren’t sure whether a revocable living trust is right for you, contact a lawyer, like an estate planning lawyer in Melbourne, FL from the Law Offices of Arcadier, Biggie, & Wood, to discuss other options. He or she can inform you on how a trust will affect your assets throughout your life and if it is worth your time to establish one.