A living trust is an estate planning document which helps you place all your estate property into a trust while you are alive, and allows you to transfer your assets to desired beneficiaries while you are still alive or even when you pass on. When forming a living trust, the beneficiaries named in this document is called a successor trustee and you, the guarantor.
Trust are essential when planning your estate. Through living trust, you can have anyone whom you solely desire manage and make financial decisions over your assets both while you are alive or dead as well as when you become mentally incapacitated. Although, living trust are in various forms and as such may require knowing the right documents and the legal procedures to filing this documents.
There are various types of trust, but majorly the irrevocable and revocable living trust, other types of trust are the special need trust or the spendthrift trust. These two however can still be placed into the irrevocable and revocable trust.
Types of living trust
A revocable living trust is a legal entity created to hold the ownership of an individual assets. A revocable living trust covers three phases of the trust maker’s life; mainly while he is alive, possible incapacitation and what happens to his estate after his death.
While the trust maker is alive, the revocable living trust documents ensures that the trust maker own, control and invest in his assets or estate. While also planning for any incapacitation the living trust document should contain a named successor, someone who would step in and take over management of the estates, make medical decisions as well as financial decisions.
An irrevocable trust is a trust document that files, established and implemented while the trustier is still alive. Just like the name implies, type of trust is irrevocable and are permanent so that the trust once funded is no longer in the possession of the trustier.
An irrevocable living trust allows you see that the properties are well transferred to the intended benefactor while you are still alive. Furthermore, it also help you evaluate and supervise the current state of the estate to ensure that their assets are in good hands.
For the sake of permanency of trust, an irrevocable trust ensure the agreement stays the same and unchanged.
Why you need a living trust
Living Trust avoids Probate
One of the benefits of living trust is that it avoids probate even while a valid and clearly written will still go through a court proceeding for your assets to be distributed to the beneficiaries according to your wishes. A living trust doesn’t require probate because the assets has been placed into the trust before the death of the trust maker. Once the assets has been transferred into the trust they will not be considered part of your estate and will not be subject to probate.
Privacy and secrecy
If you want to ensure privacy in the transfer of property, an irrevocable trust is right for you. Conflicts may arise after the death of a loved and when distributing properties. By establishing a living trust, only the beneficiary would be privy to the trust existence.