Living trust what does it mean

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Neither Protective Life nor its representatives offer legal or tax advice. We encourage you to consult with your financial adviser and legal or tax adviser regarding your individual situations before making investment, social security, retirement planning, and tax-related decisions. Living Trusts. A living trust is an easy way to plan for the management and distribution of your assets, and you don't need an attorney to do it.

Making your living trust will be easier if you think it through and gather necessary information before you sit down to do it. Last Wills. Whether a living trust is better for you than a will depends on whether the additional options it provides are worth the cost. You may have established a living trust, but it's not functional until you transfer ownership of your assets to it.

A living trust can be an important part of your estate plan, but watch out for errors that could hamper your estate planning objectives or invalidate the trust. A living trust is one of the most flexible estate planning options available, but how do you go about writing one? Follow this checklist! Find out the proper way to fund your trust so that it will accomplish your goals, and what assets you should not transfer to your trust.

Estate Planning Basics. A living trust can be an effective estate planning tool if you understand what they can and can't accomplish. Find out what to ask your attorney about living trusts so you get the most out of this powerful document. A living trust has a number of advantages, including avoiding the probate process.

However, there are also some disadvantages to it that may render it unsuitable for your estate planning needs. What Does a Living Trust Do? What Is a Living Trust? Here are some reasons you might want a living trust instead of just a will: Getting inheritances distributed more quickly. Property that passes through a will can't be distributed to heirs until the will has been through probate—a court-supervised procedure for winding up your affairs.

This naturally makes the revocable trust a more popular option. The other thing to know about both types of living trusts is that when the grantor has died, their revocable trust automatically converts to an irrevocable one anyway because the only person who could have changed it has passed on.

Download Your Free Will Preparation Checklist Make these 7 decisions before you create your will and take the headache out of the process. A living trust could have some advantages for you over other ways to manage your estate. Here are the benefits:. Here are a few issues that could make having one a hassle:. Here are some key differences:. The best way to be prepared is by having your will in place. How a Living Trust Works Your living trust holds the ownership rights or title to the assets you transfer to it.

Because the living trust is revocable , you, as the grantor, retain control over the assets in the trust even after you've transferred ownership rights or title of the assets to the trust. For example, you can: Mortgage or refinance assets Remove assets from the trust Sell or give away any or all assets in the trust You are also free to terminate the trust completely at any time.

They include: Avoiding probate. This is often the main reason people use a living trust as part of their estate plan. The assets that are held by a living trust after your death can be distributed immediately by your successor trustee.

Because these assets are held by your trust rather than your estate, they do not have to go through the probate process. Probate is a court-supervised process that can become complicated as well as time-consuming, and during this time the assets undergoing probate will be inaccessible to any of your beneficiaries.

Providing for your loss of capacity. Your successor trustee will also be able to step in to handle and administer the assets held by the living trust in the event of your incapacity to deal with the assets yourself.

So, for example, if you suffer from an accident that leaves you unable to manage the assets in the estate, the terms of your living trust allow your successor trustee to take over, without having to apply to the courts for authority to do so. Controlling the distribution of your property.

Like a will, your living trust dictates what happens to your assets after your death. And you're not limited to distributing the property immediately to your beneficiaries. For example, if one of your beneficiaries is a minor, you can set up a trust within your living trust for that beneficiary until they reach the age of majority, or an age where you feel they'll be mature enough to handle their inheritance.

Keeping your affairs private. The probate process is an open process, which means it's a matter of public record. By keeping your assets in a living trust, you retain privacy for your family after your death. This means people can't search the public record to see what assets you owned at the time of death, and how they were distributed among your beneficiaries.

The Disadvantages of Using a Living Trust There are also a number of disadvantages to using a living trust. They include: Transfer of title. While setting up the trust itself isn't particularly complex, any assets you want the trust to hold will need to be properly transferred to the trust.