What is a Living Trust?
Estate planning can be a difficult topic to broach for many people, because it is a reminder that we are mortal and that our lives must eventually come to an end. However, since we cannot take our home, possessions, wealth, or assets with us when the time does come, it is essential that we engage in careful and strategic planning. Careful estate planning can permit you pursue your goals and interests long after you have passed through the creation of a charitable trust or foundation. You can also take steps to provide for and protect your spouse, children, and other loved ones.
In short there are an array of legitimate interests and goals for which one may wish to plan and prepare. Working with an experienced estate planning attorney such as the attorneys of NewPoint Law Group can make you aware of the full-breadth of options likely to achieve your goals. We can provide legal guidance and advice regarding estate planning tools, like the living trust, that may play a role in your estate plan. To schedule a no-cost, private estate planning consultation, call us at 1-800-358-0305.
What is a Living trust and What Can it Accomplish?
A living trust is a type of trust that details your wishes and desires regarding your assets and their disposition. In many ways, a living trust can have a similar end result to that of a will, but the legal doctrine, process, and planning involved differ significantly. To start with, while a will proceeds through the probate process, a living trust does not. Furthermore, a will only takes effect once the testator (drafter) passes away. Thus a will is not typically appropriate for any wishes and concerns prior to the end of your life. In contrast, a living trust is a more versatile planning tool permitting not only the property disposition functions of a will, but also health, legal and financial concerns should you be incapacitated prior to your passing.
The two main forms a living trust can take are a revocable living trust and an irrevocable living trust. A revocable living trust is formed when the grantor transfers his or her assets into a trust. This type of trust is managed by the grantor during his or her lifetime and can be revoked at any point. While assets will pass directly to your beneficiaries, but those beneficiaries will not realize any tax benefit from this type of trust.
In contrast, an irrevocable trust requires the grantor to permanently give up his or her right to the assets that are transferred. Since all rights in the assets are extinguished, the grantor of an irrevocable trust can no longer control these assets during his or her lifetime. However, since the assets are no longer the property of the grantor, at the time of the grantor’s death they do not become part of the estate. Thus, beneficiaries will realize a tax benefit from estate planning using an irrevocable trust.
What are the benefits of a living trust?
There are a number of benefits provided by a living trust that are not provided by a will and engaging in the traditional probate process. These benefits include:
- Protects privacy – Wills pass through probate and become part of the public record. In today’s day and age of easily searchable public records, the exposure of family assets and information can be untenable. If privacy is important to you or your family, a living trust may provide the privacy you desire.
- Avoids the probate process – Avoiding the probate process can reduce the amount of time required for the estate to be handled. Reducing the amount of time required to administer the estate can often result in significant savings for the family and the estate.
- Avoid court-imposed conservatorship – If you are incapacitated, a will is inappropriate for guidance regarding your wishes and goals. If you have not engaged in planning for this type of situation a court is likely to appoint a conservator on your behalf. While the court will oversee the conservator, there is no guarantee that he or she will carry out your wishes in the way you would have liked.
- Saves money – For particularly large estates, a living trust is often an essential cost saving measure. Use of an irrevocable trust can provide a large tax benefit to your estate and its beneficiaries.
The above represents only a few of the more generalized benefits a living trust can provide. To discuss how a living trust can benefit your specific situation, contact an experienced estate planning lawyer. The attorneys of NewPoint Law Group are dedicated to providing strategic estate planning guidance in Sacramento. To schedule a free, private legal consultation call us at 1-800-358-0305 or contact us online.