A living trust is sometimes referred to as a revocable trust. It is a legal document that involves placing your assets into a trust that is administered for your benefit during your lifetime. These assets are then transferred to the designated beneficiaries once you pass on. The person charged with this duty is known as the successor trustee.
The main benefits of living trust:
Probate can be avoided
Probate refers to the legal process of distributing property after a person’s death. During the process, property is dispersed and claims are resolved. In most cases, taking a will through probate involves high attorney fees and court costs. In addition, the beneficiaries won’t be able to receive any proceeds until a probate court permits them to be distributed. This legal process can tie up the assets for a few months or even several years.
In the case of a will, your beneficiaries cannot take it to the bank until the probate court grants permission for the funds to be released. This means that they will have to wait for the legal process to end, regardless of what is stated in your will. However, with a properly drafted living trust, your beneficiaries can go to bank with a copy of the trust, your death certificate and other documentation to withdraw the funds. The transaction will be processed immediately and in accordance with the trust agreement.
Lawsuit protection maybe granted to married people if the asserts are held between 2 trusts. For instance, the assets drafted in the wife’s trust can be insulated from the acts of the husband.
Sheltering your estate
With a properly drafted living trust, you can shelter all or a large percentage of you estate. However, you will be required to conform to various sections of the tax code.
If you ever become incapacitated or mentally ill, either temporarily or permanently, you will need someone to handle the affairs of your estate. With a living trust, a pre-nominated trustee will step in on your behalf to ensure that everything runs smoothly.
It is important that you carefully evaluate your estate before you are no longer able to. Having a living trust will help to quell any troubles that may arise amongst the beneficiaries.