Living trusts were generally thought of until about 20 years ago as a planning tool for the rich. That is no longer the case as these planning tools are becoming more popular with the tax advantages offered and the privacy provided. Living Trusts are generally set up by an estate attorney while you are alive. Testamentary trusts are created after death.
Features of a Living Trust
• The Living Trust involves the individual (or a couple if you are married) who secures the Trust and is designated the Grantor or the Trustor.
• The Trustee is the individual named by the Trust as the manager or the Trust’s assets and property. The Trustee and Grantor may be the same individual or individuals.
• The third party is the Beneficiary(s). The beneficiaries are the heirs that will receive the fruits of the Trust once the Grantors are deceased.
• Living Trusts are not subject to the laws and regulations of probate. Therefore your wishes can be kept completely private and away from public scrutiny.
• Since a Trust is defined as a separate legal entity, distributions to beneficiaries can be made from the Trustee without any involvement from the courts.
• The lengthy wait and cost of probate is avoided with a Living Trust.
• Distributions can be made to beneficiaries as long as the assets have been placed in the Trust.
• Once a Living Trust is established there are few limitations, if any, about what can be placed in the trust, i.e., savings accounts, stocks and bonds, real estate, life insurance, personal property. The assets are changed from your name to the name of the Trust.
• Do your homework and find out more about Living Trusts to determine if it is an estate planning tool that might interest you.
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