A living trust is a smart choice in the event that you own real property and/or your assets are greater than $100,000. A living trust will not only save your family a tremendous amount of headache and cost upon your passing, but it will also probably prevent the need to probate your estate. A living trust can also provide a great deal of comfort by virtue of the fact that your personal information will not be made public whereas a simple will may need to be filed and probated.
A living trust is a legal entity wherein you can transfer property and assets that you own. The trust is constructed via a series of documents. The trust will designate a trustee, and, of course, you can be the trustee of your own trust. Your real estate, bank accounts, stocks, bonds, insurance polices, etc. can be transferred into the trust. There are two types of trusts: irrevocable and revocable trusts. One of the primary differences is that an irrevocable trusts entails complete transfer of ownership to the trust; the trust would pay taxes; and the trust grantor cannot remove assets from the trust without assent from all persons named in the trust. On the other hand a revocable trust provides additional flexibility and provides for the ability to modify the assets in the trust because the grantor maintains ownership.
Trusts can be difficult to properly set up and fund, and a trust and will should be created by an experienced trusts and estates lawyer. A property placed into a trust will avoid probate. A trust is also a good choice in the event that you intend to leave proceeds to a minor. Further in the event of incapacitation, a trust will help avoid the need for an administrator or a guardian because you already would have designated the appropriate individual for that role.
Our attorneys can also provide guidance concerning the following trust structures:
IRA Inheritance Trusts
Life Insurance Trusts
Charitable Remainder Trusts
Special Needs Trusts
Qualified Personal Residence Trusts
Property titled in the name of the trust does not have to go through probate which typically saves significant time and expense. Instead of a long and costly probate court action, ownership can be transferred to beneficiaries in days or weeks and with minimal expense. Additionally, a living trust keeps sensitive family and financial matters private and out of the public record.
What is the difference between a revocable and an irrevocable trust?
A revocable trust can be modified by the person who establishes the trust at a later time. An irrevocable trust typically has greater hurdles in the event a modification becomes necessary. Irrevocable trusts may be tax advantaged in certain situations.
A pour over will is used to distribute property that is not titled in the trust along with property acquired after the trust is formed. The pour over will typically distributes the non-trust assets according to the wishes of the decedent, and in some cases will place remaining assets into the trust. A pour over will is a necessary component of any estate plan where a trust is constructed.
Our attorneys will be able to give you nuanced advice about which assets should be titled in the name of your living trust. Real property is usually titled in the name of the trust along with bank accounts, brokerage accounts, stocks and bonds.
Some assets are tax advantaged in a manner such that it makes sense to leave them out of your trust in certain circumstances. Examples include, life insurance policies, certain retirement vehicles such as IRAs along with pension plans. Sometimes a separate trust can be created for these assets, and sometimes the trust should be made a secondary beneficiary. Leaving certain assets outside of the trust might also give additional flexibility to the intended beneficiary.