If you’re living in Louisville, KY and need the assistance of estate planning attorneys, you likely have basic questions before your consultation. Read on for a concise explanation of an increasingly common topic of interest: living trusts.
Living Trust: The Brief
Put simply, a living trust is a legal process by which assets are held and managed until an individual’s death, after which they are distributed.
The legal document that lays out the terms of the trust is known as the trust instrument. The person who wishes to have their assets put in the trust and managed is the grantor, while the person given management responsibilities is the trustee. All individuals the grantor wishes to receive assets upon the grantor’s death are beneficiaries.
What’s in a Living Trust?
The formal ownership or titles of the assets you choose are contained within the trust. Assets may include real estate, personal property, financial accounts, and business holdings. If you have a revocable living trust, then you may still access the assets as the grantor and remove them or use them for mortgage and refinancing purposes.
Types of Living Trusts
As mentioned, your trust may be designated as revocable. In essence, you maintain all control as the trustee until the time of your death. You can manage the assets, add or remove beneficiaries, pay associated taxes, end the trust, and change the person you wish to oversee the trust (the successor trustee) after you pass away. If you become too ill or incapacitated to manage the trust, your successor can assume control.
With an irrevocable living trust, on the other hand, a grantor relinquishes control of the trust. Terms cannot be changed unless under extreme legal circumstances, and the person establishing the trust cannot assume the duties of a trustee. The trust itself is considered the formal owner of assets. Special needs trusts and charitable trusts are also available for specific situations.
Living Trust Benefits
Individuals often prefer a living trust to a will because the latter involves a sometimes-lengthy court undertaking called the probate process. Beneficiaries can receive assets much more quickly with a living trust and avoid painful and often public legal battles. In addition, a living trust can provide greater flexibility in how you want the eventual distribution of your assets to occur.
Plus, you have the assurance that your assets will be legally safeguarded by someone you trust if you do become mentally or physically incapacitated. If you choose an irrevocable living trust, your assets will be shielded from being used as debt repayments or as lawsuit awards. This type of trust may also come with a lower tax burden. Business owners and individuals in a higher income bracket can often derive the most benefit from an irrevocable trust.
Aid From Louisville, KY Estate Planning Attorneys
As you can imagine, establishing a living trust can be a complex and time-consuming process. You must fund the trust with assets, select a trustee and beneficiaries, decide on the right type of trust for your circumstances, lay out the terms, and bring it all together in a clear legal document. Further, you may want to complement your living trust with a will.
Qualified and expert legal counsel specializing in estate planning can help you with every step of this important undertaking and answer all your essential questions.
Give your family and yourself invaluable peace of mind. Contact Winton & Hiestand Law Group and consult with trusted professionals offering over five decades of combined legal experience.