Living trusts can be very useful for a wide range of people. When you create this type of trust, you are called the grantor of the trust. There is a trustee who administers the trust, and a beneficiary who can receive monetary distributions from the trust.
While you are alive and well, you can act as the trustee and the beneficiary. You control the actions of the trust, and you can take monetary distributions if you choose to do so.
Most trusts that are referred to as Living Trusts are revocable. This means that you generally can revoke or amend the trust at any time.
Revocable living trusts facilitate probate avoidance. If you use a last will to state your final wishes regarding the distribution of your resources, the will must be admitted to probate unless the estate is very modest. The administration of the estate would be supervised by the probate court.
The heirs to the estate would not receive their inheritances while the estate was being probated. This process can be quite expensive and time-consuming, often taking close to a year in straightforward cases. Under more complicated circumstances probate can take years.
When you have a revocable living trust, the successor trustee that you choose to take over after you pass away can distribute assets to the successor beneficiaries outside of the process of probate.
In addition to probate avoidance, you can account for possible incapacity if you use a revocable living trust. You can empower the successor trustee to administer the trust in the event of your incapacitation and not have to endure the court proceeding known as conservatorship.
Asset Protection
Asset protection is a priority for some people. For example, doctors are vulnerable to malpractice suits, and landlords can be sued by their tenants.
Revocable living trusts are effective if you want to avoid probate, but they alone do not provide asset protection.
You retain incidents of ownership when you have a revocable living trust. If you want to, you can dissolve the trust and travel around the world with the assets. At the same time, you could dissolve the trust to satisfy legal judgments. This is why assets that have been conveyed into a revocable living trust are not protected from attachment.
However, there are also irrevocable trusts. Certain type of irrevocable trusts can be used for asset protection purposes. Family limited partnerships, limited liability companies and corporations can also provide asset protection. With effective planning, they can also be properly be coordinated with your living trust to avoid costly court proceedings in the event of your disability or death.
Learn More About Living Trusts
If you would like to learn more about revocable living trusts, ask for our special report. This report is being offered free of charge on the Reports section of this website.
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