A good estate plan and a proper estate document will definitely contain a living trust. Living trust is the next most common and highly important estate plan document after a last Will. With the option to select or decide what happen to your asset, named beneficiary while you are dead or alive makes a trust a complete and important document. The document provides versatility and help address complicated issues that a last Will would generally not handle. Most people opt to create a Will and neglect other essential estate plan notably a living trust perhaps due to ignorance. You should consider adding a living trust to your estate plan. An estate planning attorney would generally help you through this process.
What is a Living trust?
A living trust is a document created during the lifetime of a property owner but covers for when he alive and well, incapacitated and lastly dead. The document protects your assets, prevent unnecessary probate process and also allows have a good say on how you want your estate to be shared. Typically, once the document is created, it goes into implementation so far you have your assets placed into the trust.
A living trust provides an agreement between a trust maker, a trustee and a named beneficiary. With a trust document you as the trust maker or grantor can transfer assets to your desired beneficiary, however, through a trustee. Typically, the trustee would keep and manage the property until it finally transferred to the named beneficiary. More so, a trust can actually replace the function of Will at the death of the trust maker. It is important to know that all living trust are either revocable or irrevocable trust. The major different between these kinds of trust is who manages the assets or can be named as trustee and whether the terms in the document can be changed or unchanged.
Revocable trust
A revocable trust is a trust document that can allows the trust maker to easily change the terms in the trust. This trust ensures your sole benefits as you can name yourself as the trustee or even together with beneficiaries. Asides this, you can make changes to the terms of the document. The revocable trust helps during hard times of incapacity. It allows you name a successor trustee to handle your financial affair. As such you still hold the continued power over your assets. The underlying importance of these is that a court supervised guardianship will not be needed.
Irrevocable trust.
The irrevocable trust is quite the opposite of the revocable trust. While you can undo the terms of the document in the latter, an irrevocable trust document cannot be changed. The purpose of this trust is transfer an asset out of your name to another individual. Typically an irrevocable can help you avoid excessive estate taxes, probate and further protection from creditors. In addition, you get obtain a Medicaid eligibility as you would have transferred your assets to another person. It is important to note that you can’t serve as a trustee in this document and you can undo or dissolve the trust.
Who should be your trustee?
Typically, there are no generally rule on deciding who should manage or oversee your trust documents. The terms of the document and the type of living trust you should to create however can decide who should be the trustee. In an irrevocable trust, you can’t be named the trustee as it defeats the purpose of the forming the document which is to prevent creditor and other financial lawsuit.
For married couples who chose to create a revocable document, either of the spouses can be named as a trustee to the document. There are a few options to pick from for a trustee. You can decide to go with a family member as a trustee, a corporate trustee or even a professional trustee. Usually, an estate planning who is professional with creating estate document can easily step into this role.
Whomever you decide to choose, you need to understand that they must be competent, reliable, know how to legally transfer asset to beneficiaries and be able to handle complex financial or investment situations. A professional trustee is likely to properly fulfil these roles. Contact an estate planning attorney.
Special types of trust.
Special need trust
The special need trusts is mainly created for individual or beneficiaries of an estate with disability or any form of incapacity. It ensures that the several medical benefits such as Medicaid and other supplemental security benefits does not elude the incapacitated Individual.
Spendthrift trust
This is a special purpose trust that prevent financial loss in instances where either the trust maker or beneficiaries does not comply with the terms of trust. For instance, when a couple files for divorce, this trust protects the inheritance and shared assets. The spendthrift trust also ensure that financial asset are shared properly especially to a beneficiary who isn’t financially responsible.
