Did you know that 50% of marriages in this country end in divorce? Subsequent marriage…
A Living Trust is one of many planning tools that allow an individual to plan for how their property and wealth will be distributed to individuals and/or organizations during both their lifetime and upon their passing. So, should you set up a trust?
In transferring assets to a Trust, the grantor can still retain control over how their assets are distributed and when. For example, a grantor can dictate in the terms of the Trust the amount that can be paid out to a beneficiary and how, such as a lump-sum payment or in staggered payments, or even at a certain age obtained by the beneficiary.
Supplemental Needs Trust
In the case where a beneficiary is with special needs, the terms of the Trust can establish a “supplemental needs trust” for the benefit of the beneficiary. A “supplemental needs trust” provides a means of the said beneficiary receiving their inheritance without being prevented from receiving government assistance or eliminating government assistance that the beneficiary may already be receiving. Thus, the beneficiary’s inheritance can be protected and used to supplement the care of the beneficiary.
A Living Trust can be revocable and amendable, so if the grantor changes his or her mind about who should inherit or how much, the Trust can either be amended or, less frequently, revoked. Even where a living trust is irrevocable, there are methods by which the grantor may retain the ability to change the ultimate beneficiaries of the Trust, such as a limited power of appointment reserved within the terms of the Trust. Therefore, while the grantor may transfer assets into their Trust, the grantor may still be able to manage assets while the individual is still living.
A Living Trust can also act as a “will substitute.” As such, property, whether real estate, bank accounts, or other tangible or intangible wealth, can be transferred into the name of the Trust and the terms of the Trust then provide for what happens to the property in it once the grantor passes away. The property can be transferred into the Trust while the grantor is alive or the Trust can be designated the beneficiary of the property and receive the property upon the passing of the grantor. Accordingly, a grantor’s Last Will and Testament will not need to be probated in a court of competent jurisdiction in order for those Trust assets to be distributed to their beneficiaries.
Avoiding Probate Costs and Delays
In addition, the costs and delays involved with probate are largely avoided if most assets were properly transferred to a Living Trust or designated the Living Trust as beneficiary during the grantor’s lifetime. A Living Trust does not have to be admitted to probate by a court of competent jurisdiction, such as a Surrogate’s Court, and can help to avoid litigation for your intended heirs. It is not infallible, but a Living Trust avoids the immediate need to involve family members who might decide to cause trouble. Unlike a Last Will and Testament, a court does not need to obtain jurisdiction of a grantor’s heirs in order to validate the Trust and allow for the Trustee to act. This also proves beneficial where a Living Trust names a successor trustee to take over for the grantor or trustee upon death or incapacity. By doing so, the successor trustee can take control of the Trust’s assets without Court involvement and pay any debts or liabilities of the grantor or make distributions in a timely manner. In addition, where an individual has real property in more than one state should, they could transfer the title of their real property into a Living Trust to avoid having their nominated Executor petition courts in multiple states for control over the real properties.
That said, should you want to set up a trust, trust agreements can be complex documents. Because of that you should consult with an attorney to properly draft and execute.