Most people have this notion that having an estate plan is only for the rich, but anyone could benefit from having a plan for their asset distribution and financial succession. There are many tools in estate planning, and while most individuals are already familiar with last wills and testaments, another great tool for estate planning is a revocable living trust.
What is a Trust
A trust deed is a legal document created by a settlor to transfer their assets to a trust. Assets owned by a trust can include real property or real estate, valuable possessions, bank accounts, and investments.
Funding a trust is the process where the trustmaker will transfer their assets and estates to be owned by the trust, and once you have established a trust arrangement, you can dictate how to distribute and manage the property in trust after death.
The individual who created the trust is referred to as the grantor, trustmaker, or trustor, and the other two other individuals involved in setting up a trust are the trustee, or the asset manager, and the beneficiary or recipient of the trust. Successor trustees have the fiduciary duty to act based on the best interest of the beneficiary of a trust, and they’ll also be responsible for distributing your assets held in trust upon your death. Once you set up a trust, you can appoint anyone to be the successor trustee of your estate; it could be an attorney, an accountant, or a family member.
Upon the death of the trustee, the living trust will be irrevocable. Once the trust has become irrevocable, it can no longer be canceled or modified. During this time, the appointed trustee will become the executor and manager of the assets that are held in the trust of the beneficiaries and will oversee the distribution of the inheritance according to your wishes in the simple trust you created.
If you’re planning to establish a trust, you can seek the assistance of an estate law firm in processing your estate planning documents.
What are the Different Types of Trust?
An inter vivos trust or simply a living trust is a trust document that was arranged while the trustor is still alive. There are two types of a living trust: a revocable living trust and an irrevocable living trust.
Revocable trusts allow the trustor to terminate or modify the trust agreement. As the original trustee, you can alter the conditions of the trust anytime. For instance, a trust beneficiary can be added or removed from the trust, or alter which trust funds or assets held in a trust will be given to your beneficiaries.
In irrevocable trusts, consent from the beneficiaries of the trust is required before you can revoke or make changes to the established trust. Under trust laws, the trustor will no longer be the owner of the estate in a trust account once an irrevocable trust is established. This also means that lenders have no access to these properties anymore, which is why it’s also called an asset protection trust.
Avoid Probate Estate Using a Revocable Living Trust
As implied by its name, a revocable trust can be revoked at any time. The trustee must distribute the assets held on trust to the trust’s beneficiaries and heirs according to the trust agreement upon the death of the trustor. During this process, probate in court is no longer necessary to complete the transferring of the estate.
If you also suddenly become mentally or physically incapacitated, the appointed trustee will be given the legal right to manage all the affairs of the trust without going through probate court proceedings.
Consult with our competent Orem estate planning lawyers at Waldron Law Group to determine the best asset protection and planning tool for your estate.
Benefits of Creating a Revocable Living Trust
Compared to wills, revocable trusts provide increased privacy as well as more control and flexibility over asset distribution. Aside from avoiding probate, other benefits in choosing a living trust as your estate plan include:
- Having several protective measures in place. In a living trust, these measures automatically take place when you become incapacitated or when you die. A revocable trust not only accounts for conservatorship or guardianship, but you can also put specific instructions on how the trust administration should take place according to your last wishes.
- Preventing beneficiaries or family members from contesting your trust. While it may seem that creating a trust requires more funds and effort than creating a will, it will save you and your family time and money in the long run. Your assets can be distributed without probate, and a trust can hold out better than wills do to contests.
- Having more privacy in regards to your estate. While a will becomes a part of public record after your death, trusts remain private which can help you protect both your trust estate and named inheritors in the trust.
- Owning the assets in a revocable trust. Your assets will remain yours and you will pay taxes accordingly. That includes any income taxes, inheritance taxes, or estate taxes
If you are looking for the best asset protection for your estate, our Orem estate planning lawyers are here to help. Contact us today to know more about your legal options and schedule a free consultation for your trust and estate planning.