You may have heard your California friends and neighbors talking enthusiastically about their living trusts and wondered what a living trust is, whether you might want to set one up, too, and what benefits you will receive if you do. As RBC Wealth Management explains, a living trust is one you establish during your lifetime and over which you have complete control.
Basically you place all or whatever portion of your assets you choose into a trust, designate yourself and/or someone else as the beneficiary, and appoint yourself or someone else as the trustee. At that point the trust owns all the trust assets and the trustee immediately begins managing and using those assets for your beneficiary’s benefit. Since you yourself can be both the beneficiary and the trustee, this means that you still maintain complete control over your assets.
Living trust benefits
In addition to having complete control over your assets, your living trust provides numerous additional benefits to you as well, including the following:
- You can change or even revoke the trust at any time.
- You may receive substantial income tax savings.
- You can designate a successor trustee to manage and distribute the trust assets in the event you cannot do so yourself because of illness, incapacity or simply because you no longer wish to do so.
- You can specify whether or not the trust terminates at your death or continues to benefit your beneficiaries after you die.
- Your estate settlement costs will be lower after you die because your trust and the assets it contains do not need to go through probate.
- You maintain your personal financial privacy since your living trust is not a public document like your will.
Your living trust serves as your foundation estate planning document. Not only does it provide for you and your needs in virtually any situation, but it can do likewise for any family members you designate as co-beneficiaries. In addition, should you wish to travel and otherwise take life easy after you retire, your successor trustee can assume the responsibility of managing and distributing the trust assets per your wishes, thereby relieving you of that responsibility. Perhaps the greatest benefit of a living trust is that it can give you rather extraordinary peace of mind, both now and during your golden years.
While this information is not legal advice, it can help you understand living trusts and how they work.