Hyden, Miron & Foster, PLLC Law Blog

Monday, September 9, 2019

The Benefits of a Living Trust

To set up a trust, you, the trust settlor, transfer ownership of assets to the trust. The trust holds legal title to the property and is managed by a trustee for the benefit of the trust beneficiaries. There are several types of trusts and each has variations that make them unique. For instance, you may wish to establish a living trust. 

A living trust, also referred to as an “inter vivos trust,” is one that you create while you are alive and one in which you retain full control over the property held in trust. Upon your death, the terms of the trust will dictate how your assets are transferred and to what beneficiaries.

What are the Benefits of a Living Trust?

Living trusts have many benefits that make them attractive to those establishing an estate plan. First, a living trust allows you to retain control of the property held in trust while you are still alive. In fact, most living trust settlors choose themselves and their spouse as trustee of the trust. You also have the ability to alter the terms of the trust as much as you need or to dissolve the trust altogether. Some other kinds of trust, namely irrevocable trusts, do not allow for this.

One of the major benefits and the main reason many opt to establish a living trust is that a living trust falls outside of probate. Instead of the assets held in the trust going through probate and beneficiaries having to wait through a lengthy and costly process, the trustee can distribute the trust assets to named beneficiaries as soon as the terms of the trust allow.

Additionally, since the living trust does not go through probate, it will not become public letter. Many people find this privacy aspect of a living trust enticing. Those assets that go through probate become part of the public record for anyone to review. This is not so with a living trust. 

In addition to the privacy benefit of avoiding probate as well as the cost and time savings of avoiding probate, a living trust also has the benefit of reducing the taxable estate amount for federal income tax purposes. Many larger estates have a value exceeding the federal estate tax exemption. Putting assets in a living trust means that they will not be included in the calculation of the value of the estate thus reducing your estate tax liability. 

A living trust is also beneficial if you have a beneficiary with special needs or a beneficiary that is a minor child without the ability to manage his or her finances yet. The trust allows you to provide them with financial support without having to give them the assets outright. You can set up how and when you want the assets distributed for their benefit when you draft the terms of the trust document.

Comprehensive Estate Planning by Experienced Attorneys

A living trust has many significant benefits and you may want to consider having one as part of your estate plan. If you have any questions about your estate planning options, Hyden, Miron & Foster is here to provide you with the benefit of their extensive knowledge and experience in the field of estate planning. Contact us today.

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