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A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.
A “living trust” is simply a trust you create while you’re alive, rather than one that is created at your death under the terms of your will. Different kinds of living trusts can help you avoid probate, reduce estate taxes, or set up long-term property management.
A “living trust” is simply a trust you create while you’re alive, rather than one that is created at your death under the terms of your will. Different kinds of living trusts can help you avoid probate, reduce estate taxes, or set up long-term property management.
The big advantage to making a living trust is that property left through the trust doesn’t have to detour through probate court before it reaches the people you want to inherit it. In a nutshell, probate is the court-supervised process of paying your debts and distributing your property to the people who inherit it.
The average probate drags on for months or up to years in some cases before the inheritors get anything. And by that time, there’s less for them to get: in many cases, about 10% of the gross estate has been eaten up by lawyer and court fees.
The average probate drags on for months or up to years in some cases before the inheritors get anything. And by that time, there’s less for them to get: in many cases, about 10% of the gross estate has been eaten up by lawyer and court fees.
Property you transfer into a living trust before your death doesn’t go through probate. The successor trustee – the person you appoint to handle the trust after your death – simply transfers ownership to the beneficiaries you named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.
Assets held in your living trust at your death can be managed by the trustee of your living trust and distributed in accordance with your directions in the trust. The trustee is also accountable to your beneficiaries for the trust assets held for their benefit after your death. The trust is not under the direct management of the probate court at and after your death and, therefore, the value and the nature of your assets and the identity of your beneficiaries do not become a public record.
At your death, however notice must be given to all of your heirs and to all beneficiaries of your living trust, advising them, among other things, of their right to obtain a copy of the living trust. If your assets were in your name alone at your death, then they would be subject to probate. Probate is the court-supervised process developed under State law which has as its goal the transfer of your assets at your death to the beneficiaries set forth in your will, and in the manner prescribed by your will.
At your death, a petition is filed with the court, usually by the person or institution named in your will as executor. After notice is given and a hearing is held, your will is admitted to probate and an executor is appointed. A full inventory of the assets held in your name alone at your death is filed with the court and the probate continues until your estate is ready for distribution and the court approves the final distribution of your estate.
Probate can take more time to complete than the distribution of your trust following your death. Assets held in a living trust can be more readily accessible to beneficiaries than those in a probate. The cost of a probate is often greater than the cost incurred by a comparable estate managed and distributed under a living trust.
At your death, however notice must be given to all of your heirs and to all beneficiaries of your living trust, advising them, among other things, of their right to obtain a copy of the living trust. If your assets were in your name alone at your death, then they would be subject to probate. Probate is the court-supervised process developed under State law which has as its goal the transfer of your assets at your death to the beneficiaries set forth in your will, and in the manner prescribed by your will.
At your death, a petition is filed with the court, usually by the person or institution named in your will as executor. After notice is given and a hearing is held, your will is admitted to probate and an executor is appointed. A full inventory of the assets held in your name alone at your death is filed with the court and the probate continues until your estate is ready for distribution and the court approves the final distribution of your estate.
Probate can take more time to complete than the distribution of your trust following your death. Assets held in a living trust can be more readily accessible to beneficiaries than those in a probate. The cost of a probate is often greater than the cost incurred by a comparable estate managed and distributed under a living trust.
Yes. The living trust is valid in each state and in all commonwealth nations, since the Trust came specifically from English law. The living trust should also be valid in most nations that have a civil code.
Revocable means changeable. As long as your trust is revocable, you can continue to change it whenever you desire. As long as your trust is revocable, you continue to control your assets. Irrevocable means you give up control of your assets. In most instances, you don’t want to give up control of your assets.
Making a living trust work for you does require some paperwork. For example, if you want to leave your house through the trust, you must sign a new deed, showing that you now own the house as trustee of your living trust. And in a few states, you may need to use special language in your trust document to avoid wrinkles in your state’s income tax laws. This paperwork can be tedious, but the hassles are fewer these days because living trusts have become quite common.
The living trust does not have to be registered anywhere.
Yes. If you want to avoid probate, you should have a living trust whether you are married or not.
No. A will becomes a matter of public record when it is submitted to a probate court, as do all the other documents associated with probate – inventories of the deceased person’s assets and debts, for example. The terms of a living trust, however, need not be made public.
Holding assets in a revocable trust doesn’t shelter them from creditors. A creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your own name.
After your death, however, property in a living trust can be quickly and quietly distributed to the beneficiaries (unlike property that must go through probate). By the time creditors find out about your death, your property may already be dispersed, and the creditors may not know exactly what you owned (except for real estate, which is always a matter of public record). It may not be worth the creditor’s time and effort to try to track down the property and demand that the new owners use it to pay your debts. Also, in California there is a procedure to limit the time which creditors have to make claims against the trust estate.
After your death, however, property in a living trust can be quickly and quietly distributed to the beneficiaries (unlike property that must go through probate). By the time creditors find out about your death, your property may already be dispersed, and the creditors may not know exactly what you owned (except for real estate, which is always a matter of public record). It may not be worth the creditor’s time and effort to try to track down the property and demand that the new owners use it to pay your debts. Also, in California there is a procedure to limit the time which creditors have to make claims against the trust estate.
Yes. You can sell and add assets yourself without requiring a change of the trust. In essence, you can do anything you want with your property while it is in the trust. You retain complete control over your assets.
Yes. The most common example of such property is a house still subject to a mortgage. Your beneficiary will be responsible for that debt when he receives the property from the trust.
Yes. A will is an essential back-up device for property that you don’t transfer to yourself as trustee. For example, if you acquire property shortly before you die, you may not think to transfer ownership of it to your trust — which means that it won’t pass under the terms of the trust document. But in your back-up will, you can include a clause that names someone to get any property that you haven’t left to a particular person or entity.
If you don’t have a will, any property that isn’t transferred by your living trust or other probate-avoidance device (such as joint tenancy) will go to your closest relatives in an order determined by state law. These laws may not distribute property in the way you would have chosen.
If you don’t have a will, any property that isn’t transferred by your living trust or other probate-avoidance device (such as joint tenancy) will go to your closest relatives in an order determined by state law. These laws may not distribute property in the way you would have chosen.
A simple probate-avoidance living trust has no effect on taxes. More complicated living trusts, however, can greatly reduce the federal estate tax bill for people who own a lot of valuable assets.
One tax-saving living trust is designed primarily for married couples with children. It’s commonly called an AB trust, though it goes by many other names, including “credit shelter trust,” “exemption trust,” “marital life estate trust,” and “marital bypass trust.”
Each spouse leaves property, in trust, to the other for life, and then to the children. This type of trust can save up to hundreds of thousands of dollars in estate taxes, money that will be passed on to the couple’s final inheritors.
One tax-saving living trust is designed primarily for married couples with children. It’s commonly called an AB trust, though it goes by many other names, including “credit shelter trust,” “exemption trust,” “marital life estate trust,” and “marital bypass trust.”
Each spouse leaves property, in trust, to the other for life, and then to the children. This type of trust can save up to hundreds of thousands of dollars in estate taxes, money that will be passed on to the couple’s final inheritors.
It is a good idea to review your living trust at least once a year with the professional that set it up for you. As a general rule, you should change your trust anytime it is no longer what you want. Any major changes in your family, such as marriage, divorce, death, birth, etc., could justify a change in your trust.
If your Successor Trustees or Guardians can no longer fulfill their responsibilities, you should make changes accordingly. You retain the power to make changes at any time to the heirs or successors of your Living Trust by simply entering an amendment to your trust.
If your Successor Trustees or Guardians can no longer fulfill their responsibilities, you should make changes accordingly. You retain the power to make changes at any time to the heirs or successors of your Living Trust by simply entering an amendment to your trust.
You place your assets into your trust by changing the name on all of your titled assets, i.e. savings accounts, money markets, stocks, mutual funds, CDs, annuities, life insurance, bonds, and your fixed assets such as real estate, into the name of your living trust. This is a very important step that must be done for your assets to truly avoid the Probate process. It is simple to do and very, very important.
Yes. Usually you remain the trustee during your life and your children take over at your death. You cannot name a minor child as a trustee.
When you die and all the assets in the trust are distributed, the trust will end. If you retain assets in the trust after your death for distribution to your heirs over a number of years, the trust will remain active until such time as your instructions dictate the end of the trust or all assets are finally distributed. This could take a few years, or decades. It depends on how you express your wishes in the trust. Additionally, since this is a revocable living trust, you may revoke it at any time, prior to a designated event, usually death.
Yes. You actually do business in the name of your trust. You can buy, sell, trade, or give away your assets. It all depends on you, the Trustee. You have complete control of your assets and can do anything with them after the trust is formed that you could do before the trust was formed.
Usually not. A Living Trust contains language that makes it almost impossible to contest, even by an heir. It states that if an heir is not happy with their share of the assets and wishes to contest the trust, they will receive nothing! A former spouse also cannot break a trust, so long as all assets are properly funded into the trust.
No. You continue to file a 1040 as you always have, using your social security number. A Living Trust, being revocable, does not need a tax identification number and does not file a tax return of its own. It also does not trigger a reassessment for property tax.