A written trust is a written legal document that partially substitutes for a will. A living trust takes into account all of your assets, including your home, stocks, bank accounts, and vehicles in some cases. These assets are documented in the trust, administered for your benefit throughout your lifetime, and transferred to your beneficiaries upon your passing.
The trustee in charge of managing the trust’s assets is usually whoever is establishing the trust in the first place. This gives the individual developing their trust the ability to still manage their assets while they are written into the trust during their lifetime. However, they may still transfer power to another individual if they somehow become unable to manage their assets while they are still alive, such as through physical or mental incapacity.
A typical living trust agreement is revocable, or able to be modified or revoked at any time by the individual that wrote it.
A living trust offers these benefits:
- The trustee maintains the legal right to manage and control the assets held in the trust.
- The trustee is instructed to manage all the trust’s assets for their benefit throughout their lifetime.
- The beneficiaries are named that will receive the trust’s assets upon their passing.
- Guidance as well as certain powers and authority are given to the trustee to manage and distribute the trust’s assets. This is particularly important if the trustee is anyone other than the trust during the trust’s lifetime, as they are not permitted to use the assets for any personal gain not to the benefit of the trust unless with explicit permission.
A living trust can be the most important part of estate planning. As such, there are many reasons to consider drafting one. An important consideration is the reason why you need a living trust.
What Can a Living Trust Do For You?
A living trust ensures that your assets will be managed to your benefit by a trusted individual if you should ever become unable to manage them yourself. As mentioned previously, a living trust can be an important part of incapacity planning.
A trustee can be named other than yourself initially, or you can establish another trustee immediately. This allows you to control when your assets become legally controlled by another individual. Upon your passing, the trustee is designated to gather your assets, pay any debts, claims and taxes, and distribute the assets according to your wishes. This is done without need of court supervision or approval, which makes it different in execution from a will.
Does Everyone Need a Living Trust?
There are some circumstances where a living trust may be unnecessary. Young married couples without children and lacking a substantial amount or value of assets may not benefit from establishing a living trust if they intend to leave their assets to each other if the other passes. Individuals in general who do not have much in terms of assets and have established simple estate plans do not require a living trust. Additionally, if an individual should prefer court supervision over the administration of his or her estate, a living trust would not be a good option. Typically, the greater the value of your assets, the more likely you are going to want to establish a living trust.
How Do You Decide Who Your Trustee Will Be?
Most individuals in a living trust will serve as their own trustees until they become incapacitated or die. Other individuals may pass responsibility of any or all assets immediately if they are unable to manage them for some reason or simply do not want to.
Generally, a trustee will be chosen based on a variety of factors mostly relating to their experience and trust. This individual may be a spouse, relative, domestic partner, close friend, business associate, or professional fiduciary.
You may want to discuss your decision with an estate planning attorney. Often times, your attorney can provide you with advice as to whether or not the individual is a suitable candidate to be your trustee. However, it is ultimately your decision as to who your trustee will be.
Are There Any Disadvantages of a Living Trust?
The biggest possible disadvantage of a living trust is that if you select the wrong trustee, it is possible that they might take advantage of you and not manage your assets in your best interest. Distribution and management of assets would typically take place under court supervision, but this is not the case with a living trust. The cost of a living trust may also be higher than simply preparing a will, but depending on the complexity of your estate plan, this may not be a significant factor. Additionally, a living trust may require some extra paperwork in certain circumstances if, for instance, you wish to take out a loan on any of the property that is within the trust.
In the end, if your paperwork is drafted correctly, an appropriate candidate is selected as a trustee, and you have significant assets worth protecting, a living trust is a worthwhile consideration.
Establish a Living Trust With An Estate Planning Lawyer
When establishing a living trust, it’s important to select an appropriate attorney to draft your paperwork and provide legal advice. Dwight Tompkins, living trust attorney Orange County, is a professional attorney with years of experience in living trusts and estate planning.
For questions, or to schedule a consultation, contact Dwight Tompkins today at 714 385 0044.
No one wants to consider the reality that one day they will no longer be in control of their assets. However, making this consideration for the benefit of yourself and your beneficiaries is crucial. Contact Dwight Tompkins today!