A living trust is a legal document in which you place assets to be managed by a trustee. A living trust is also known as a revocable trust because you can modify or dissolve the trust during your lifetime. When you create a living trust, you are known as the trust’s grantor. The assets within the trust are managed for your benefit during your lifetime.
The grantor also may choose to also serve as the trustee. However, you also need to designate a successor trustee. That person’s job is to manage the trust’s assets in the event of your incapacitation. After the grantor’s death, the successor trustee distributes the assets within the trust to its beneficiaries according to the grantor’s designations.
Advantages of a Living Trust
A living trust has several benefits that make it worthy of your consideration.
Privacy. A will must be processed through the probate court and becomes part of the public record. In contrast, a living trust does not go through the probate process and remains a private matter between the trustee and the trust’s beneficiaries.
Speed. A will can take months or years to be processed through the court, which means your heirs may have that long to wait to receive their inheritance. Assets within a living trust can be distributed to your beneficiaries within weeks.
Potential Cost Savings. A living trust may cost more to create than a will. However, a will usually is more expensive to process since court costs have to be paid. With a living trust, your heirs do not incur those court fees.
Protection. If you become physically or mentally incapable of handling your affairs, your successor trustee can manage your finances. The role of a successor trustee is particularly important if you do not have a spouse or adult children to pay bills and file taxes during your incapacitation.
Every family’s situation is unique. Our estate planning attorneys at Bird & Fugal can help you decide if a living trust is right for you.