What is a living trust and why should you care?
February 16, 2018 - Posted by: admin - In category:
This is a common question dealt with nicely by a Huffington Post article by Carrie Schwab-Pomerantz, CFP.
Among the items covered by this helpful online article are the following:
- basic estate planning starts with a Will, which covers the appointing of a guardian for minor children and provides a very basic framework for asset distribution upon death (a Will is not legally effective until a person is dead);
- healthcare decisions are not covered by a Will (or a Trust), but are instead handled via health care directives, living wills, HIPAA authorizations, DNRs and related documents;
- a Living Trust is a Trust made during the life of the trust-maker (as the name indicates) to provide for the management and eventual distribution of bank accounts, real estate, vehicles and other assets;
- most Living Trusts are designed to be revocable or changeable at any time during the life of the maker of the Trust (Irrevocable Trusts are different animals altogether);
- a successor trustee is named so that upon the disability or death of the maker of the Trust, there is a person or professional entity authorized to carry out the terms of the Trust as specified by the grantor (i.e., one of the titles given to a person who commissions a Trust);
- probate avoidance is a key reason for why people use Trusts; Trusts can help people avoid probate altogether when established and maintained properly;
- probate avoidance usually means the preservation of privacy and overall savings in fees and expenses;
- while a trust usually costs more on the front end to establish and there are some costs of maintenance over time, when compared with the costs of a Will plus probate, the trust option almost always saves a significant amount of money;
- while there are other probate avoidance methods available, there can be significant drawbacks to each of these other methods, including the loss of asset protection for heirs and increased taxes;
Here is a link to that Huffington Post article: https://www.huffingtonpost.com/entry/what-is-a-living-trust-do_b_8135956.html