Four Reasons To Consider A Living Trust

A living trust is a powerful estate planning tool

, and we discuss four reasons a family should consider using this tool within their estate plan.

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A living trust is a powerful estate planning tool, and we discuss four reasons a family should consider using this tool within their estate plan. To review how a living trust works:

A living trust is a legal arrangement that manages a person's property during their lifetime and distributes it according to their wishes upon their death.

A grantor transfers ownership of property to the trust and selects a trustee to manage it. The trustee may be a family member, a trust attorney, or even the grantor.

Upon the death or incapacity of the grantor, a successor trustee will take over (if the grantor was the trustee) and distributes or manages the property according to the terms of the trust.

Why would a family use a living trust?

1.To professionally manage trust property

Naming a professional trustee to manage trust property allows the property to have professional trust management. When assets are professionally managed, the trustee can manage trust property to meet specific family goals, such as having income and capital available to meet financial needs later in life.

2.To avoid probate

Property held within a living trust avoids probate. This allows the trust property to pass more smoothly and without the delays that may occur within probate, which is the legal process that administers an estate of a deceased person. Avoiding probate also allows financial information to remain private, as probate is a court process that creates a public record.

3.To have a plan to manage assets later in life or in the event of incapacitation.

A successor trustee may be named within a living trust to take over management of the property should the grantor, the person who set up the trust, become incapacitated. This allows the grantor to have a plan in place to take care of financial issues, rather than face the possibility of a court-ordered process such as conservatorship should they no longer be able to make financial decisions on their own.

4.To protect beneficiaries

The living trust document can include a provision stating that the assets of the trust are not subject to the claims of creditors of a beneficiary. In other words, no one can sue a trust beneficiary and collect a judgment from trust assets before the beneficiary is entitled to receive them. This can be particularly helpful if an adult child has creditor issues or perhaps a pending divorce.

Living trusts arent for every single estate plan, but in many cases, a living trust can be the cornerstone of a comprehensive estate plan that eases the burden of your passing on loved ones and allow for the management of your assets later in life. Talk with a living trust attorney to determine if your estate can benefit from a living trust.

by: SchneiderLawOR

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