What Is a Living Trust?

February 4th, 2016

A living trust, like a will, sets forth your desires regarding the distribution of your assets upon your death. Designing a trust includes choosing a successor trustee, who will perform the same role as an executor of a will, to carry out your instructions. After you die or become unable to take care of your legal or financial affairs the successor trustee manages and/or distributes your assets. Conversely, a will takes effect only after it enters probate following your death.

Generally, living trusts are preferable to wills if for no other reason than that they can avoid probate if properly funded. This is particularly important if the estate entails large assets (such as a family farm), property in more than one state or involves a blended family. In addition, trusts are advantageous if you have minor children or dependents with special needs, as these instruments enable your assets to be protected during their lifetimes from divorce and lawsuits.

The legal system offers two main types of living trusts: revocable and irrevocable. Many people have one of each.

  • In a revocable trust, you, as the trustmaker, have control over your assets as long as you are alive and well. You can make changes at any time. However, this type of trust, like a will, offers no nursing home protection.

  • In an irrevocable trust, you also transfer your assets to the trust during your lifetime, which means you must relinquish some control over them. However, if designed properly, the trust assets are protected from a nursing home after five years, from the date of the transfers.

3 Benefits of Living Trusts Over Wills

  • The avoidance of the probate system means your beneficiaries will receive their inheritance faster. Avoiding probate also protects your assets from being consumed by lawyer fees and prevents time-intensive legal wrangling.

  • Trusts, unlike wills, offer privacy, because they are not public record.

  • Trusts also can help save on estate taxes.

Once you’ve created and funded your trust(s), you’ll have peace of mind, knowing your affairs are in order. The experienced living trust attorneys at Gudorf Law Group can guide you through the process. Please call 1-937-898-5583 today for a free consultation.