Living trusts often are the subject of small talk on the golf course or in social gatherings; however, not many folks understand what they do. They are called “living” because they’re created while you’re still living. You will sign it and it’ll become an enforceable document. The living trust may be irrevocable or revocable. Revocable trusts may be amended or revoked by you. Irrevocable trusts can’t be changed once they’re executed.
Typically, when you create a revocable trust, the estate plan involves a will which “pours over” your assets to a revocable trust. Upon your death, all assets that are in your name alone become part of your estate. Then, your will directs your estate’s executor to give them to your trust’s trustee to administer them.
For an estate planner, that is where it gets fun. Trusts address several issues, depending upon the language in the individual trust. Below are four reasons to consider a living trust.
- Decrease estate taxes — If you’re married, a trust may lead to estate tax savings. In some areas, for instance, a correctly administered and drafted trust may save a couple around $100,000 in estate taxes upon the death of the second spouse.
- Protect minor children — A living trust may hold the funds for minors until they’re responsible enough to manage the funds themselves. A Trustee will manage the funds and, typically, can make distributions for the benefit of the minor child until they are old enough to receive the funds outright. Many clients like to stagger their children’s access to the funds over a span of time, for instance, at ages 25, 30 & 35.
- Save grown-up children from themselves — If you believe your son or daughter will have issues managing the funds himself/herself because of an alcohol or drug problem, or because he or she is simply bad with money, a trustee may hold the funds in trust for your son or daughter’s lifetime and distribute it as necessary.
- Keep assets in the family — If your young adult is getting married and you don’t like his/her fiancé, a trust can help ensure your legacy remains within the family. Without one, in the event of a divorce, your assets could potentially end up with your ex-son/daughter-in-law.
For more insight on living trusts and other estate planning services, contact our team at LifePlanLaw.com – Blackburn Law Firm today at (727) 826-0923.