What is a living trust?
A living trust is a fund that holds your assets while you are still alive. This term usually refers to a “revocable trust” (more on revocable and irrevocable below). The grantor of a living trust typically serves as its trustee, but you can also name a “successor trustee” to take over the management of the trust.
The main advantages of a living trust are that it enables you to avoid probate court procedures, maintain your privacy, and facilitate the management of your assets by your successor trustee in the event of your incapacity.
Benefits of a Revocable Living Trust in estate planning attorney
You can use every asset in the trust during your lifetime as the grantor. Unfortunately, many grantors decide to serve as the trust’s initial trustee and then transfer that responsibility to another person upon becoming incapable or passing away. Any liquid assets you’ve left in the trust are still yours to spend, and any homes you’ve left in the trust are still yours to live in. The benefits of a revocable trust will be realized when you pass away or become incapacitated.
A revocable trust enables the assets to avoid the probate procedure and associated costs for the court and legal representatives. The probate process can be avoided entirely with a fully funded revocable trust, which transfers all the grantor’s assets to the trust before the grantor’s death.
In “pour-over” wills, the grantor specifies that any probate assets not already in the trust should transfer to it upon death. Revocable trusts are used in conjunction with these wills. Moreover, the directions for distributing the person’s estate plan will contain in the revocable trust. The process will be depicted in the diagram below.
The Operation of a Living Trust
To create a living trust, follow these three steps:
- Establishing the trust with legal counsel
- Retitling deeds and accounts allow you to “fund” the trust by transferring ownership of assets from your name to the trust’s name.
- Choosing a “trustee” can be a family member, a professional trustee, or the person who established the trust for themselves.
In income tax, credit, and estate tax matters, a revocable trust treats you and the trust as one. Therefore, a revocable trust does not affect your ability to deduct property taxes on your tax return.
Additionally, whether you own the property as an individual or a trust, the transaction has been treated equally, whether you sell it for a profit or a loss.
How can an Estate Planning Attorney help you in a Revocable living trust?
A probate attorney can help you safeguard your assets and draft legal documents to fulfill your final wishes.
- Make a living trust that complies with the law.
- Pay for the trust.
- Choose a trustee.
- Change the trust as necessary.
- To maximize the advantages of estate planning, add more documents.
The purpose of this information is to provide you with a fundamental understanding of revocable trusts. However, it cannot take the place of a thorough review with your estate planning attorney. A comprehensive estate plan must include the implementation of a revocable trust. Moreover, asset ownership must coordinate between the trust and the individual.
The person chooses the appropriate assets for funding the trust. Moreover, the transfers must take place, and there must be a regular asset allocation review. Finally, there needs to be a discussion of Tax considerations with experts. The trust agreement should reflect your family, financial, and tax objectives. Therefore, when set up and used correctly, a revocable trust can assist you in achieving these objectives.