Understanding the Living Trust and Its Advantage

A living Trust is an important estate planning tool that helps you protect your assets. It’s especially crucial during the costly and time-consuming probate process, which occurs after your passing. Furthermore, a Trust is private and not made public since it doesn’t have to be filed with a court. If you understand the mechanisms of a Trust and its advantages, you can turn to a Cincinnati probate attorney for assistance in setting up this beneficial document.

What Is a Living Trust?

Unlike a Will, which goes into effect upon someone’s death, a living Trust becomes active when the grantor sets it up and funds it with assets. It also remains in effect during their lifetime. A trustee the grantor appoints and identifies in the Trust can administer the trust’s provisions if the grantor becomes incapacitated. Remember that the grantor maintains complete control of the assets even though they are held in the name of the trust.

The trustee must explicitly follow the grantor’s wishes and begin asset distribution as quickly as possible upon their passing. Liquid assets can be distributed immediately while real and personal property must be sold, unless the property is designated to be transferred upon death. This means all property and liquid asset accounts, including equity accounts, will be held in the Trust’s name.

Surprising Benefits of Living Trusts

Some facts about living Trusts may surprise you, but prove beneficial. For instance, the Federal Deposit Insurance Corporation (FDIC) typically insures each bank account up to $250,000, but the limit can be higher for a trust. For example, if you name five beneficiaries, the trust is protected at $1,250,000. By the way, we recommend consulting a Trust and estate lawyer if you want to identify more than five beneficiaries.

Another fact you may not know is that you can create a Trust to provide for a controlled distribution of assets to a minor child. The Trust can also provide for the continuing care of a disabled child or an adult family member who needs special care.

You can also set up a Trust to distribute controlled assets to any beneficiary regularly instead of paying out one lump sum. For example, the grantor may believe that their spouse or adult child would use the proceeds more wisely if they were distributed in installments instead of all at once.

Retirement accounts may not need to be in the Trust since these have a beneficiary identified. A few other accounts can be created to transfer directly to a named beneficiary.

Finally, living Trusts aren’t just for the extremely wealthy. This critical estate planning mechanism also benefits people of modest means or few assets. Having a Trust ensures your assets will go to the people you intend. Otherwise, those decisions are left to a probate judge. A qualified attorney can explain the law regarding living Trusts and other estate planning issues to ensure your wishes are followed after your death.

Expert Guidance for Your Living Trust

If you’re considering setting up a living Trust, you can turn to Donnellon, Donnellon & Miller. One of our attorneys experienced in small business, estate planning, guardianship, and related legal matters can guide you through the process. We’ll help you identify the advantages of having a Trust, regardless of your family situation.