Do you have a will? Most people understand how important it is to plan ahead, and making out a will is often the first, and unfortunately, only step they take towards that goal. A will is all well and good and is definitely a must-have, but if you have not considered a living trust, then your estate plan is seriously lacking a key component. Read on to find out how a living trusts works and how it can complement your will.
What is a Trust?
This is a somewhat intimidating word so it might be helpful to think of a trust as a basket. This basket is empty until you, the owner, places assets into it. You can place any sort of property you wish into the trust – real estate, vehicles, cash, stocks, bonds, etc.
As the owner of the trust, you can also remove property from the basket. With a revocable trust, as long as you are alive and acting in full capacity, you can do anything you wish with the basket of assets – even destroy the basket entirely.
This basket of assets comes with provisions. These provisions allow you to customize each and every asset by naming a person to inherit the asset upon your death along with conditions, such as specifying that a certain amount of funds be paid yearly, on a birthday, or upon an occasion.
What is a Living Trust?
When people hear the word living trust, they might assume it has to do with medical and health issues, but that is not necessarily the case. The "living" part of the term just denotes the ability of the owner to make changes prior to their death.
Once the owner has passed away, the trust is frozen and changes cannot be made. As far as medical needs go, everyone should address things like incapacity, resuscitation, and powers of attorney with their estate attorney as part of a complete estate plan.
How a Living Trust Benefits Those Named
When you add a beneficiary onto a given asset, you are doing more than benefiting them through financial enrichment. You are also making it easier for them to access their inheritance.
Here is an example: if you leave a sum of money to your son in a will, they will receive that money once the will has been probated. Probate can take several months to be complete. If you leave that same sum of money to your son in a trust, they have immediate access to it.
To learn more about living trusts, speak with a family attorney.
Share10 April 2019
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