A living trust is basically a trust
that is created when one is alive rather than being created when one
dies. This legal agreement is drawn to ensure the property of an
individual is dispersed as per his wishes when he dies. The individual
transfers the ownership of assets to the trust. He then chooses a
trustee who administers it. The trustee could be a friend, family
member, a law firm or an attorney among others. The trustee holds the
legal title of the property on behalf of the beneficiary.
Since this agreement is entered into
when the owner is still alive, it can begin benefiting him immediately.
It is revocable meaning that one can make any desired changes. It shows
how the income and assets it has earned should be distributed after his
death. If the owner is the trustee and he becomes disabled or
incapacitated a successor trustee can manage the financial affairs.
It can be used for all kinds of
properties. Just like the will, it offers quite a broad planning
flexibility. For it to work properly it is important to ensure that all
the property has been transferred from the name of the owner to that of
the trust.
There are many benefits of having
such an agreement. Firstly no property registered herewith will be
subject to probate. Probate is a process supervised by the court that
involves distributing your property to your inheritors and paying off
your debts. With this kind of agreement, your assets technically are not
yours any longer as the trust owns them. So, your loved ones are saved
the hassle of probate which can be expensive and time consuming.
If one is able and willing, he is
allowed to manage his own trust. In this case, he makes a provision for
the successor trustee to take over after his death. Upon your death, the
successor trustee simply transfers all ownership to beneficiaries named
in the trust. After all the property has been transferred to the named
beneficiaries, the trust ceases to exist.
Another benefit is that this
document offers some level of privacy. This is because the terms of this
agreement are not made public upon the death of the owner. This means
that the deceased individual's debts, assets and inventories remain
private. The estate is then distributed privately.
This is an easy way of transferring
assets to your inheritors free of probate in a matter of weeks or a few
months of your death. It is especially ideal for people with large
estates. A married couple would also find it ideal at it could offer
savings on income and on estate taxes in form of a joint living trust.
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