You may have heard of a living trust and wondered how it differs from a will and whether it’s something you should have. Feel free to share this information with your clients and staff.
A living trust is similar to a will in that it states what should happen to your property after you pass away. But a living trust is also a valuable tool long before you die because it directs how you want your assets managed during your lifetime.
In creating a trust, you transfer ownership of your assets, including any property, to the trust. Don’t worry: You are still in charge of your assets as long as you appoint yourself as the trustee. (You will need to name a successor trustee to distribute the assets after your death, however.)
You can also arrange for an alternate trustee in case you become incapacitated and can no longer manage the trust. You could appoint a trusted friend or family member as a trustee. Or you may prefer to appoint a neutral third party, such as a bank or trust company, although you may have to pay a fee to this type of trustee.
Even if you have a living trust, you may still need a will. The will can cover any property or items that are not part of the trust.
Some people set up a living trust in order to avoid the probate process. Probate isn’t necessary with a trust because the trust, not you, owns the assets. Avoiding probate can often save time and money.
A living trust isn’t for everyone. And the laws regarding trusts vary from state to state. In general, it may be helpful to have a trust if you:
- Need help in managing your assets during a time when you are incapacitated.
- Have children or grandchildren with special needs.
- Own property in more than one state.
Talk with an attorney who specializes in estate planning. He or she can help you decide if a living trust is the right tool to manage your assets. And check your employee benefits to see if your company offers legal assistance or a discount within a network of attorneys.
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