A living trust is a legal unit that allows individuals to relinquish their property to trusted parties who could be an attorney, the trust maker themselves, a corporation, or a banking officer. In the event of death, the trustee follows the directives of the trust maker's agreement to hand over their assets and property to listed beneficiaries.
Differentiating Revocable and Irrevocable Trusts
In a revocable living trust, the grantor or trust maker can effect changes in beneficiaries in the case of divorce or mental incapacitation. Additionally, they can still buy more assets or sell current ones. In simpler terms, the trust maker in a revocable living trust has full control over their assets or property. Irrevocable living trust scenarios require the trust maker to appoint another party as a trustee, transferring total control of their assets to them.
There is no retracting of an irrevocable living trust once the power of attorney has taken effect. They can neither reclaim their property back nor make any changes. Some people prefer revocable living trusts because they remain in control and are easy to implement. A living trust has a set of benefits for those who consider adding it to their estate plans.
Benefits of a Living Trust
The most outstanding benefits of a living trust are as follows:
Avoid Probate Process
The probate process entails thorough legal scrutiny of the deceased's last will before transferring assets to listed beneficiaries. This isn't a process many people would like their grantees to go through because it can take a long time, not to mention the involved probate fees. Even simple cases can take several months in a probate process.
You can, therefore, save your loved ones from the probate court process by arranging a living trust. It facilitates a quick, direct, and seamless transfer of assets to named trustees. The probate process highlights one of the differences between a living trust and a last will and testament.
Avoiding the probate court process equals privacy. This is because the probate process is usually public, with the records out there for anyone who cares to search. A living trust, on the other hand, is private, and the agreement details are not divulged publicly. Unlike in a will situation, personal and family financial affairs remain protected from scrutiny, a nice move that protects your trustees from swindlers and predatory creditors.
Financial Control Before and After Death
You would never wish the money meant for your children to end up with their former spouses after divorce settlements. A living trust gives you the power to hold and release funds to your children until they reach a certain age or milestone, such as graduating.
Through a living trust arrangement, you can prevent your children's spouses from accessing the assets should they end up divorcing. You can shield your assets from other mismanagement cases, like drug-related problems. You can also choose not to release all the funds at once, but in pre-agreed amounts for the pre-agreed duration of time.
Avoid a Conservatorship Situation
The conservatorship issue may ring a bell if you are familiar with Britney Spears' recent court case, in which she sought to remove her father as her wealth custodian. Conservatorships are not bad, yet can turn messy when entrusted to the wrong people.
Besides, the process requires the intervention of the courts to take effect. In a case where you become debilitated, a living trust can save your family from going the conservatorship route. A trustee can simply take over your asset's management without court involvement.
Need Legal Help Creating a Living Trust?
Are you ready for a living trust but don't know how to get started? Law Offices of James C. Shields firm is ready to help you kickstart your living trust journey. Contact us today for inquiries and more information on living trust.