What is a Living Trust?
What is a Living Trust?
You may be searching for “what is a living trust?” and you’ve come across this post from the team at Lorenzo Law. Read on to learn more about how living trusts work, assets in a living trust, types of living trusts, advantages and disadvantages of a living trust, and more! We’re here to help in any way we can, so feel free to contact us and we’ll be sure to respond as soon as possible.
How Living Trusts Work
Living trusts are created during the grantor’s days while they’re alive and well. The grantor’s assets are transferred into the trust and managed by a designated trustee. There’s no objection to the grantor managing the trust via being a trustee, yet when the grantor passes or becomes incapacitated, the successor trustee takes over.
Assets in a Living Trust
The typical assets placed in a living trust consist of real estate, bank accounts, investment accounts, personal property, and business interests (ownership, angel investing, etc…)
Types of Living Trusts
Below are the two types of living trusts:
Revocable Trusts
A revocable trust allows the grantor to modify or amend assets of the trust and maintain control over said assets. Beneficiaries may also be changed if the grantor would like to do so.
Irrevocable Trusts
An irrevocable trust is a type of trust in which the grantor cannot be modified or revoked, except in very limited situations and circumstances. A benefit of an irrevocable trust is that assets transferred into said irrevocable trust are most likely going to be protected from creditors and estate taxes.
Advantages & Disadvantages of Living Trust
Below are some of the advantages and disadvantages of a living trust:
Advantages
The advantages of a living trust are you can avoid or reduce probate, they’re private, they have built-in functionality for an incapacitated individual, and flexible trust terms.
Disadvantages
The disadvantages of a living trust are the associated costs, the often complex nature of said trust, and limited control once the assets are transferred into an irrevocable trust.
Living Trust vs. Will
Here are the differences between a living trust and a will:
Living Trust
A living trust takes effect during a grantor’s lively existence, assets held within the trust will likely be able to avoid probate, and the living trust is privacy-oriented.
Will
A will takes effect after the grantor’s death, the probate process of accounting for and distributing assets can be expensive and time consuming, and the will becomes public record in some states after it’s filed in probate court.
How to Create a Living Trust
To create a living trust, one must draft, sign, and find the trust, then appoint a trustee to manage the trust’s assets. We can help with this entire process and have you on her right path.
Is a Living Will the Same as a Living Trust?
No, a living will specifies healthcare preferences for an individual, should they become incapacitated. A living will has no influence over asset management and distribution, as it does with a living trust.
Costs of a Living Trust
The costs of a living trust may vary wildly from client to client, yet it’s often always worth it. A living trust can provide the security and stability one typically wants, while also reducing costs in other areas (probate court).
Contact Lorenzo Law for Help with Your Living Trust Needs, Today!
If you need help with your living trust, you’ll want to contact us to learn more about how we can help. We’ll be glad to consult with you on the unique matters of your situation and provide clarity on how we can best assist. Feel free to reach out using the button below and we’ll be sure to respond to your inquiry as soon as possible. We look forward to hearing from you soon.
