What is a Living Trust and Do I need One?

A living trust is, as the name implies, is a trust created while the trustee is alive, as opposed to one created upon the trustee?s death. A living trust is not a substitute for a will, but instead acts in conjunction with a will. After a living trust is written and signed, the trustee should transfer all assets, including home, bank accounts, etc., into the trust. However, even though the assets are held in the trust, the creator of the trust generally the trustee during their lifetime, which means they can administer the trust for their benefit and, upon their death, it can be distributed to their beneficiaries. If you are married, you and your spouse are co-trustees and, upon the death of one spouse, everything transfers to the other. Nothing needs to be done to transfer any of the assets, since they are already in the trust. Upon the death of the second spouse, everything will be transferred, via the trust and will, to the beneficiaries.

Living trusts are generally revocable.

A revocable trust means that you can add and withdraw assets at your discretion. Thus, you are in control of your assets during your lifetime. A revocable trust can be amended or revoked at any time by the person or persons who created it.

Not everyone needs a trust.

However, and sometimes a simple will is sufficient. However, for couples with large estates, it is very helpful to have a trust implemented. If you have a large estate, you can, for instance, create a finance committee to look after the finances of the trust upon your death before your children turn 21. Additionally, with a trust, you can arrange for any kind of distributions you wish for your children. Many people find it helpful to have a payout to the children at different ages, such as 21, 25, and 27. Therefore, not all the assets are given to the child at one time.

Additionally, due to the flexibility of the trust, you can set up college funds, funds for your grandchildren, or any other type of provision you wish.

If you have a large amount of assets and you want to provide for children and/or grandchildren in this way, a living trust can be very beneficial. Additionally, your age affects whether a living trust is appropriate for you. Oftentimes, living trusts do not make sense for middle-income people in good health who are under the age of 55, because the living trust does not do anything for you during your lifetime. It only comes into effect upon death. Additionally, if your children are already over 21 or 25, or whatever age you have determined, a trust might not be as important either because you can simply transfer assets to the children without having to worry about them frivolously going through the estate. But, of course, that is not always the case.

Therefore, it is important to speak to an attorney to determine what is right for you. Typically, Albuquerque Business Law, P.C.?s estate planning packages include a will, advance health care directive, power of attorney and, if appropriate, a living trust. Let us discuss with you whether a living trust is appropriate. Although it will add additional costs, it will in some cases definitely be worth the extra expense.

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Source: http://www.albuquerquebusinesslaw.com/legal-advice/what-is-a-living-trust/

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