While you may generally understand the benefits of executing a will, a living trust is another option to consider as part of your estate planning goals. There are multiple benefits, but it is important to fully understand how they work and whether a trust is the right fit for your objectives. The Law Office of Kristina M. Reed can explain how living trusts work and describe the benefits of these powerful estate planning tools.How a Living Trust Works in an Estate Plan
When people mention a living trusts in connection with estate planning, they are commonly referring to the revocable form. There are three key players:
- The Grantor, who creates the trust, appoints a trustee, incorporates relevant terms, and funds the trust;
- The Trustee, often the grantor’s spouse, who is charged with managing trust assets on behalf of the beneficiaries; and,
- The Beneficiaries, who benefit from receiving distributions from the trust, including assets, principal, and income.
Because it is revocable, the grantor can make changes to the trust terms at any time. As grantor, you can fund the trust during your lifetime by titling certain assets in the name of the trust. For instance, you may want real estate, investment accounts, and other types of assets to be held by the trust and managed by the trustee. A revocable trust can be part of a comprehensive estate plan when you also execute a “pour-over” will, which deposits all of your assets into the trust upon your death. At this point, the revocable will becomes irrevocable and can not be modified.Advantages of Creating a Living Trust
A revocable living trust shares some common characteristics of a will in that it allows you to designate how your assets are distributed to beneficiaries after death. However, there are additional advantages that make a trust an attractive option as part of your estate plan.
Avoiding Probate: When you create a pour-over will as part of your revocable trust, upon your death it is as though you owned nothing. There are no assets to probate, as all your real estate and personal property are held by a separate entity – the trust – to be managed according to its terms. Probate can be time-consuming and expensive, even when you think your will takes care of all loose ends.
Privacy: The key provisions of a revocable trust are private, unlike a will, which is probated and becomes part of the public record. If you have concerns about your privacy, a living trust can alleviate them.
Protecting Beneficiaries: Not all beneficiaries in a will have the capacity to accept distribution of assets, such as minors or disabled adults. Plus, there may be others whom you believe are not responsible enough to take control over assets without wasting them. Through a trust, you can designate exactly how trust principal and interest are distributed – thereby protecting your assets after death.Talk to a Sacramento, CA Attorney About Living Trusts and Other Estate Planning Options
If you would like to know more about living trusts and the role they play in an effective, comprehensive estate plan, please contact the Law Office of Kristina M. Reed in Sacramento, CA. You can call 916-492-6033 to set up an appointment and learn more about your options.