Do I Need A Living Trust?
Living Trusts 101
trust, like a corporation, is an entity that exists only on
paper but is legally capable of owning property.
A flesh and blood person, however, must actually be in charge
of the property; that person is called the trustee.
You can be the trustee of your own living trust, keeping
full control over all property legally owned by the trust.
There are many kinds of trusts.
A living trust (also called an inter vivos trust) is simply a
trust you create while you're alive, rather than one
that is created at your death under the terms of your will.
All living trusts are designed to avoid probate.
Some also help you save on death taxes, and others let you set
up long-term property management.
Property held in trust is actually "owned" by the trustees
of the trust, subject to the rights of the beneficiaries. The
trust itself doesn't actually own anything.
I need a living trust? Property you transfer
into a living trust before your death doesn't go through
probate. The successor trustee, the person you appointed to
handle the trust after your death, simply transfers ownership
to the beneficiaries you named in the trust
In many cases, the whole process
takes only a few weeks and there are no attorney or court fees
to pay. When the property has all been transferred to the
beneficiaries, the living trust ceases to exist.
expensive to create a living trust?
The cost of creating a living trust depends on what you want
to achieve. The more complicated a living trust is, the more
expensive it will be. Also important to note is that while the
fees associated with creating a living will are paid upfront a
living trust actually saves you money and time by avoiding
trust document ever made public, like a will?
A will becomes a matter of public record when it is submitted
to a probate court, as do all the other documents associated
with probate - inventories of the deceased person's assets and
debts, for example. The terms of a living trust, however, need
not be made public.
trust protect property from creditors?
Holding assets in a revocable trust does not shelter those
assets from creditors. A creditor who wins a lawsuit against
you can go after the trust property just as if you still owned
it in your own name.
After your death, however, property in a living trust can be
quickly and quietly distributed to the beneficiaries (unlike
property that must go through probate). That complicates
matters for creditors; by the time they find out about your
death, your property may already be dispersed, and the
creditors have no way of knowing exactly what you owned
(except for real estate, which is always a matter of public
record). It may not be worth the creditor's time and effort to
try to track down the property and demand that the new owners
use it to pay your debts.
On the other hand, probate can offer a kind of protection from
creditors. During probate, known creditors must be notified of
the death and given a chance to file claims. If they miss the
deadline to file, they're out of luck forever.
need a trust if I'm young and healthy?
Probably not. At this stage in your life, your main estate
planning goals are probably making sure that in the unlikely
event of your premature death, your property is distributed
how you want it to be and, if you have young children, that
they are cared for. You don't need a trust to accomplish those
ends; writing a will, and perhaps buying some life insurance
a living trust save taxes?
A simple probate-avoidance living trust has no effect on
either income or estate taxes. More complicated living trusts,
however, can greatly reduce your federal estate tax bill if
you expect your estate to owe estate tax at your death.
If you're wondering whether you need a living trust give us a
925-634-2344. We'll help you figure out the answer.
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