Estate planning can be a tricky process not only because there are so many matters to address in your plan, but also because you can manage your assets in so many different ways. Wills, for instance, are not the only method of distributing your valuables when you die.
As a probate litigation lawyer in Bergen County, NJ from a firm like the Law offices of Joshua Kaplan can explain, you should consider a few pieces of key information that may help you understand the purpose of living trusts and whether a trust could be advantageous to your estate plan.
Understanding Living Trusts
When a grantor creates a trust, he or she relinquishes personal assets to place them under the control of a third party, the trustee. In general, trusts serve as money management tools that ensure your assets are handled and distributed according to your wishes when you die. The trustee is often responsible for allocating money to the trust’s designated beneficiaries.
Living trusts, in particular, are trusts that a grantor puts into place while he or she is still alive. The terms of a revocable living trust can be modified as the grantor sees fit, as the grantor typically names himself or herself as the initial trustee. Irrevocable living trusts, on the other hand, cannot be changed once you have set the terms and signed the papers.
Benefits of Living Trusts
A key advantage of living trusts is that they allow your estate to skip the probate process. Unlike living trusts, wills must be picked apart in a courtroom, sometimes racking up large bills and leading to familial disagreements. Additionally, living trusts are more private than wills, as anyone can view the contents of a will once it is made public.
Another perk of setting up a living trust is that it allows you to name backup trustees so your estate always has someone to manage it when you are unable to do so. Though irrevocable trusts may be a bit disconcerting due to their rigidity, these trusts may also help you avoid federal estate taxes.
Setting Up a Living Trust
If you think a living trust may be a good option for you, you must determine which type of trust you would like to create, which assets you will put into it, and who will serve as your successor trustee. It is wise to contact a living trust lawyer to help you with these decisions, as he or she may be able to highlight tax consequences and legal issues you are not familiar with. Your living trust lawyer can also ensure your documentation is completed thoroughly and officially so there aren’t any problems down the road.
