Guardian Estate Planning, Inc.

Living Trust

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You may have heard of a living trust, but maybe you think that only rich people need or can create such a thing. Actually, a living trust is relatively easy to create, and there are very valid reasons why you and I should consider creating one. A living trust effectively empowers your designated trustee to manage the trust's assets and property for the benefit of you and your family. The trustee can be anyone you choose, including yourself! You will also be able to appoint a successor trustee, much like an executor of a last will and testament, who will see that your wishes are carried out.

Another thing that prevents us from taking this step is that most of us simply do not want to think about what would happen if we die or become incapacitated. This type of thought frightens us or makes us feel bad. We do not want to comprehend the fact that we will die some day. But, what will happen to our family? Are there small children in the home? Where will they go? What will happen to them?

These are questions everyone needs to answer and answer as soon as possible. Life comes at us quickly and it ends just as fast. While this is not a pleasant thought, it is something that needs to be discussed and planned for. A living trust can assist an individual in having their desires followed if they cannot answer for themselves. It is also vital that everyone take time out of their busy lives and accomplish a living trust.

Despite the feeling that most of us have that this is over our heads, an individual can obtain the necessary legal documents and forms without a lawyer's help. They are relatively straightforward and simple to fill out. It is very important for a person to complete a living trust so that their hopes and desires can be realized even after they are gone. The paperwork will normally just take a couple of hours to fill out. Every few months or when things in an individual's life changes dramatically these documents will need to be updated.

It really is that simple. It will not take long and, thanks to your living trust, your loved ones will not have to figure out your desires when you are gone. Your living trust will settle the estate. Many times when an individual does not have a living trust, or at least a will, the government can take what rightly belongs to their loved ones.

This type of document can assist you with what you would like to accomplish. If you are seriously hurt in an accident, a living trust will assure that you receive exactly the care that you want. An individual may choose not to live on a breathing machine or with a feeding tube for the remainder of their lives. This is important for loved ones to understand the significance of a person's wishes. Without a living trust your loved ones may be fighting over what they think is best for you when you are not able to speak your wishes.

Instead of the young children winding up with the comfort of a caring relative, they could end up in the state's custody. No parent would want that for their child. They need to have a living trust to ensure their well-being and others in the family. It is an important step to take at any age. Tomorrow may never come, live for today and protect your family for the future.

An individual is terrified of death or becoming a burden on other people. You can control what happens after the unthinkable occurs. Our Representatives will guide you through the process of obtaining a living trust or any auxiliary documents you may need. It is one of the most important steps an individual can make in their lives. Do not let the state or government be in charge of the future of your family. Take that important step today to meet with our Representative to start the process to protect your family. After they are completed, talk to family members and let them know what the final wishes and desires are. They need to know what will happen if a major part of the family is no longer around.

What is a Living Trust?

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" (also called an "inter vivos" trust) is simply a trust you create while you're alive, rather than one that is created at your death.

Different kinds of living trusts can help you avoid probate, reduce estate taxes, or set up long-term property management. For more details, see How Living Trusts Avoid Probate.

Why should I make a Living Trust?

The big advantage to making a living trust is that property left through the trust doesn't have to go through probate court. 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 before the inheritors get anything. And by that time, there's less for them to get: In many cases, about 5% of the property has been eaten up by lawyeres and court fees.

Still, not everyone has to worry about probate, and some people don't need a living trust at all.

How does a Living Trust avoid probate?

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.

Is it a hassle to hold property in a living trust?

Making a living trust work for you does require some crucial 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. This paperwork can be tedious, but the hassles are fewer these days because living trusts have become so common.

Is a living trust document ever made public, like a will?

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.

Does a living trust protect property from creditors?

No. 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.

Generally, after your death, all property you owned -- including assets held in a living trust -- is subject to your lawful debts. For example, if your house is held in trust and passes to your children at your death, a creditor could demand that they pay the debt, up to the value of the house. Ownership of real estate is always a matter of public record, so creditors can always find out who inherited real estate. It can be more difficult for creditors to know who inherits other property, however (because a trust document, unlike a will, is not a matter of public record), and they may not bother tracking it down.

On the other hand, probate can also offer a kind of protection from creditors. During probate, known creditors must be notified of the death and given a chance to file claims. If they miss the deadline to file, they're out of luck forever.

If I make a living trust, do I still need a will?

Yes, you do -- and here's why:

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 will, you can include a clause that names someone to get all of the property that you haven't left to a specific beneficiary.

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.

Can a living trust reduce estate taxes?

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.