Living Trusts: What Are They?
Advanced Trustee Education
You may have been hearing talk about living trusts. A living trust is an optional method of owning property while you are living and transferring that property after your death. It is also known as a revocable trust or an inter vivos trust. When you fill out the legal documents to create a living trust, you are giving instructions pertaining to the management of the property you transfer into the trust. It directs the disbursement of the income from the trust and states how the trust property will be transferred after your death. When you set up the living trust, you must name a trustee to oversee it.
Who should be the Trustee of your Living Trust?
It is not unusual for a person to be the trustee of his or her own living trust, allowing them to maintain control of their property. You may choose, however, to name someone as a co-trustee or choose another individual or a financial institution to act as the trustee. It is also wise to name a successor trustee to take responsibility if in the future you become disabled or die. Naming a co-trustee or a successor trustee is a serious decision. You need to consider that person’s abilities and trustworthiness. In some cases, it may be a sensible choice to name a financial institution as the successor trustee.
Review Your Living Trust Every 4-5 Years
What are the Advantages of a Living Trust?
There are many reasons people choose to create a living trust. Some of the advantages include
- Allowing another person or bank to use their financial expertise to control your investments
- The piece of mind of knowing your property will be managed if you become too sick or disabled to do it yourself
- A living trust may make it possible to avoid the hassles of going through probate
- A living trust may be less expensive than a will in the long run
- A will sometimes offers less confidentiality than a living trust
What are the Disadvantages of a Living Trust
- It can be more expensive and time-consuming to create a living trust instead of a will
- If you wish to avoid probate, all of your assets and property must be included in the living trust
- There are sometimes issues regarding proof of authority when dealing with checks or transfers of property
- You must be able to trust your co-trustee or successor trustee completely
- If you choose to use a third party as your trustee, there may be fees involved
Make Your Own Living Trust
What if you Change your Mind?
After you have created your living trust, you still have the ability to make changes. A living trust is a revocable trust, which means you can change it or terminate the trust entirely as long as you are still mentally competent. No changes are allowed if you become mentally disabled or after your death.
If you are considering a living trust, be aware that there are scammers who may try to take advantage of the situation. The best way to safeguard your hard-earned assets is to engage the services of a competent attorney who specializes in this type of law. A living trust may be the right decision in your case or it might not be the best choice for your situation. Your lawyer can guide you to the right conclusion.