Lawyers can sometimes seem to be speaking another language. Nowhere is this truer than in elder law and estate planning. For example: Do you need an inter vivos trust? What is a “pour over” will? What’s the difference between an irrevocable and revocable trust?
A living trust involves all the above. But the concept is relatively straightforward, when you cut out the legalese. Below is a clear summary of a living trust and why one might be right for you.
What a living trust does
A revocable living trust holds your assets. Everything in it is still yours: you can spend it, sell assets or do anything else with it you’d like. You can change your mind entirely and end the whole thing. That’s the good part about a revocable trust. However, the trust is the legal owner of the assets until you decide differently.
The purpose of a living trust
Why create a living trust? The benefits include:
- Avoiding probate: Because the trust is the owner and you have already indicated how it should be managed and distributed, your estate will not have to go through probate. Probate is the court-supervised distribution of an estate. Avoiding probate can save time and money.
- Avoiding guardianship: A living trust can also help during your lifetime. You will name your successor trustee in the document. This prevents the need for a court to step in and name someone to have control of your assets if you become incapacitated.
- You can minimize the risk of a lawsuit: Having a living will can make it more difficult to contest your chosen distributions.
Is a living trust right for me?
Like any estate planning tool, whether you should create a living trust depends on your circumstances and goals. However, it isn’t just a tool for the extremely wealthy. Anyone interested in its benefits should consider making one.
It isn’t the only estate planning tool you’ll need
Keep in mind that you cannot simply create a living trust document and walk away. You still need to fund the trust and create a will that accounts for any assets you accidentally or purposefully left out. This “pour over” will acts as a bucket that catches anything not in the trust.
No blog can determine whether a living trust is right for you, however. Your situation is unique, so your estate plan should be, too. If you are interested, speak to an experienced estate planning attorney to get your questions answered.