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Trusts aren’t just for the wealthy. A growing number of Americans from all walks of life are incorporating living trusts into their estate plans. Learn how a living trust can safeguard your estate. For assistance with establishing a trust, contact the Law Offices of Alice A. Salvo to speak with a living trust attorney from our team.
A living trust is a legal arrangement you can set up during your lifetime. You (the grantor) place assets of your choosing into the trust, including:
Then, you designate a trustee to manage the trust assets during your lifetime and distribute them per your directions after your death. You also name beneficiaries who will receive the assets.
These and other terms of the trust are set out in a legal document known as a trust agreement.
Trusts are powerful estate planning tools. They can reduce tax exposure and safeguard your estate from various liabilities. However, for optimal protection of your estate, you will benefit from making the right choice for the type of trust that serves your needs. An experienced living trust attorney can analyze your financial and personal situation and suggest an appropriate trust for you.
The two main categories of living trusts are revocable and irrevocable. Both types of trusts protect your assets from probate — a legal process during which a special court ascertains the authenticity of your will and oversees asset distribution after your passing.
Probate can be costly and time consuming. The proceedings are also public and afford little to no privacy. One of the main benefits of trusts is that trust property can usually bypass probate and pass directly to your heirs while maintaining privacy.
While both revocable and irrevocable trusts can safeguard your assets from probate, they don’t provide the same level of liability protection.
You can amend or terminate (revoke) a revocable trust as often as you like while you are alive.
During your lifetime, the trust assets remain your personal property. After your passing, the assets become part of your estate. That means your assets won’t be protected from creditors or lawsuits.
Because you remain in control and maintain ownership of the assets, a revocable trust also offers few tax advantages. On the flip side, revocable trusts don’t increase your tax rates either.
As the name suggests, you can’t change or revoke an irrevocable trust — except in very limited exceptions.
Once you sign the document, your assets are no longer yours: They become the property of the trust. That means they won’t be subject to estate taxes, but will be subject to gift taxes, and are safe from creditors and lawsuits. Note that you won’t benefit from this protection if you create the trust to purposefully defraud creditors.
Living trusts are effective estate planning tools — but they aren’t for everyone. Talk to a living trust lawyer and carefully weigh the pros and cons before establishing a trust.
At the Law Offices of Alice A. Salvo, we can advise whether a living trust is a good fit for you. Together we’ll create the right estate plan for your needs. Call 818-938-8642 or contact us online to speak with a living trust attorney from our team.