Understanding The Advantages Of A Living Trust
A living trust is an estate planning tool that allows the grantor, or the maker of the trust, to authorize a trustee to administer the estate’s assets without going through the costly and time consuming probate process. A trust preserves the privacy of the trust; it is not made public since it does not have to be filed with a court. The grantor maintains complete control over the trust, and they can make changes to the trust and even revoke it if they choose to.
Benefits Of A Living Trust
The significant benefit of a living trust is that it will kick in upon the death of the grantor. A trustee appointed by the grantor and identified in the trust has the authority to administer the provisions of the trust. This means that the grantor’s wishes will be explicitly followed, and the distribution of assets can begin quickly. Liquid assets can be distributed immediately while property, both real and personal, will have to be sold unless the grantor arranged for property to be transferred upon their death.
The living trust is created when the maker places their assets into the trust. This means that all property and liquid asset accounts including equity accounts will be held in the name of the trust. Keep in mind that the grantor maintains complete control of the assets even though they are held in the name of the trust.
All About Living Trusts
Some facts about this trust may surprise you. The Federal Deposit Insurance Corporation normally insures bank accounts up to $250,000 for an individual, but the limit is higher for a trust. For example, if 5 beneficiaries are named, the trust is protected at $1,250,000. An estate planning attorney should be consulted if more than 5 beneficiaries are named.
Another fact that may not be known is a trust can be created 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 another family member who needs special care.
A trust can also be used to create a controlled distribution of assets to any beneficiary. For example, the grantor may believe that their spouse or adult child would use the proceeds more wisely if the proceeds were not distributed in a lump sum.
Accounts such as 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.
Many people are surprised to learn that this type of trust is appropriate for people of modest means and few assets. The living trust can be completely explained by an attorney who is experienced in estate planning and creating revocable trusts. This attorney can identify the advantages of having a trust for every family situation.