Forbes’ recent article, “What Is A Living Trust? Definition, Pros & Cons,” explains everything you need to know about living trusts to determine if one is right for you.
The grantor (or owner of the assets) transfers property ownership to the trust. They will name a trustee to manage the trust property. The grantor can choose to be the trustee, retaining control of trust property. However, the grantor can also designate a “successor trustee.” The successor trustee will manage the trust property if and when the primary trustee becomes incapacitated or passes away.
The grantor also names beneficiaries of the trust. These individuals are the individuals (or other entities) who benefit from the trust. The grantor designates beneficiaries who will inherit the property held within the trust after the grantor’s death. A significant benefit of a trust is that the assets held within the trust transfer to the beneficiaries without going through probate.
Creating a living trust entails drafting a formal legal document that:
- Establishes the trust
- Names the trustee (and successor trustee)
- Names the beneficiaries; and
- States when and how trust property will be transferred to beneficiaries.
Note that after you create the trust document, you must transfer the property title to it.
The trust becomes effective as soon as you create it. However, because it’s a living trust, you have the right to cancel it or make changes to it any time you want to.
A living trust is a powerful legal tool. However, there are other estate planning documents that you may need. Work with an experienced estate planning lawyer to get help creating a living trust, as well as assistance in developing a comprehensive plan to protect you in case of incapacity and to provide for your loved ones after you’re gone.
Reference: Forbes (May 12, 2023) “What Is A Living Trust? Definition, Pros & Cons”