Understanding Living Trusts

Now more than ever, it is important that every asset you have is accounted for. Even more, if you want to make sure that your family is taken care of upon your death, it is crucial that you begin planning how those assets will be distributed now. For years, individuals used wills to help pass their assets on to their loved ones. But now, people are turning to living trusts as a more common way to ensure that their property is appropriately distributed when they die.

The Basics of Living Trusts

Living trusts are legal arrangements created typically by an estate attorney where your assets are put into a trust that holds and manages the property during your lifetime and then gives the property to your heirs when you die. It holds its name because it is created while the person who initiates it is still alive. There are three parties named in this legal arrangement: the Grantor or Trustor (the person establishing the trust), the Trustee (the person who will control the trust), and the Beneficiaries (those who will officially be the heir to the trust after the Grantor has passed away). The basic intent of this type of legal arrangement is to make sure that the assets and property the grantor owns is distributed according to his or her wishes after dying, as opposed to having the courts get involved.

The Benefits of a Living Trust

There are a number of benefits associated with living trusts. One is that you are able to avoid probate (or have the courts interfere with the distribution of your property). This is possible because the trust itself is recognized as a separate legal entity, so the Trustee can make the distributions without involvement from the court system. Another benefit is that you can place almost anything into your trust, including savings accounts, real estate, life insurance, stocks, bonds, and personal property. Having this many options with the trust ensures you won’t lose control of your assets.

Who Should Have a Living Trust?

The question you’re probably asking yourself now is “are living trusts right for me”? This question can best be answered by the assets that you now have or anticipate having before your death. A basic guideline is that if you have an estate of $100,000 or more then you can definitely benefit from this type of legal arrangement. Additionally, if you know that you will be subject to estate taxes then this would be a good choice for you.
If you need more information on these beneficial legal arrangements, or are interested in learning about advanced living trusts, seek the advice of an estate attorney or visit an online resource you trust.

Don’t know where to start when it comes to making a living trust? Help is here.

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