Living Trust Benefits
Living Trusts has become one of the most common estate planning
tools in estate planning. A living trust usually consists of three
parties that consist of the person who is establishing the trust as
the Grantor or Trustor. A Trustee is named by the Trust and controls
all the assets. The last party to a living trust is the
Beneficiaries or the heirs that will receive property from the Trust
once the Trustor has died. One thing to note is that in many setups
of living trusts is that the Trustees are usually the Grantor as
You can establish a revocable living trust where you can end any
time you feel the need. Another trust is a irrevocable living trust
that once established it can’t be canceled or at least it will take
quite awhile to dissolve through the legal system.
People with an estate of $100,000 or more can gain from having a
living trust. Estates of $100,000 or more are subject to probate in
their state of residence, which can cost the estate heirs anywhere
from 1.5%-5% based on the states total net worth. Living trusts can
be very handy for people that are subject to estate taxes through a
Living trusts can be designed to accommodate different family
situations such as people that remarry and have children from other
people as well as family members that are trouble. By setting up a
living trust people can know beforehand in case something happens to
you how you want your affairs to be handled or distributed.
One of the biggest benefits of a living trust it allows you to avoid
probate, which is having a legal hearing to resolve all claims and
distributing wants left of the estate when you die. With a living
trust the Trustee can distribute your assets without any involvement
of the court system. This protection of a living trust helps in not
having your assets tied up in the often lengthy and pricey probate
court. A Trustee has the legal right to distribute the assets to the
heirs. So when setting up a living trust you should make sure all
your property is designated inside the trust.
One you have a living trust setup you can place money, real estate,
life insurance and other personal property inside the trust. If
structured right you still maintain control of all your assets so
don’t be afraid of this issue. You or someone you trust must be
named as Trustee.
Ever who is designated as Trustee will be obligated to carry out
your wishes if for some reason you’re able to do it such as unable
to care for yourself. The Trustee on behalf of the living trust can
still carry out your wishes. The Trustee must carry out your wishes
as defined in the living trust.
A living trust can help you minimize estate taxes by eliminating up
to $2 million dollars subject to tax as stated in the Estate Tax
Credit. The $2 million applies to individuals as well as couples. If
a living trust has an A-B provision that if one spouse dies the
living trust is divided into two different trusts. Each of the
separate trusts will get the $2 million exemption.
The benefit of the A-B provision now will provide up to $4 million
is value eliminated from estate taxes.
Everyone with property valued over $100,000 should setup a living
trust. Living trusts are easy to setup and don’t require much
maintenance once established. One drawback of a living trust is that
your estate is not protected from any creditors or a divorce and
don’t eliminate estate taxes except the $4 million with the A-B
provision or the standard $2 million for individual’s or couples
without the A-B provision.