Trusts are frequently used in estate planning. Living trusts created during the life of the grantor facilitate the transfer of assets to heirs without the cost and publicity of the estate. Trust transfers are usually faster and more efficient than will transfers. The surest way to avoid probate is to have a trust.
A living revocable trust does not need court approval. Everything is kept private, and your successor trustee can take over your management immediately after your death. The main function of wills and trusts is to name the beneficiaries of your property. In a will, you simply describe the property and list who should get it.
When using a trust, you must do so and also transfer ownership to the trust. See Transfer of Ownership to Trust, below. However, there are many ways you can simplify, or even completely eliminate, the probate process. One of the most effective ways to make things easier for the people you leave behind is to create a trust as part of your estate planning.
Anything you put inside your Trust can be passed on while you avoid legalization. And, a big benefit of having a trust is that the distribution of assets remains private, while the distribution of assets through a will and a probate. Anyone who is single and has assets titled in their exclusive name should consider a revocable living trust. The two main reasons are to keep you and your assets out of a court-supervised guardianship and allow your beneficiaries to avoid the costs and hassles of probate.
A trust offers several advantages over a will. First, a trust allows your heirs to avoid probate, while wills are necessary to go through succession. Probate is the process by which a court transfers ownership of your assets to the persons named in your will. For example, the probate court would oversee the sale of your home and the distribution of profits according to the designated beneficiaries of the will.
There may be significant costs and delays associated with probate, and if you die and your heirs need access to money right away, probate will make it unlikely. Keep in mind that after creating a trust, you must also finance it by transferring assets to it, making the trust the owner. Most revocable living trusts (including the one you can purchase through the %26 Will trust) include what is called a dumping will, which is a type of will designed to work in conjunction with your trust. Another advantage of a trust is that it gives you more control over the distribution of your assets than a will.
Unfortunately, trusts are often seen as a tool only for the super-rich, which is one of many misconceptions about trusts that can make this planning strategy underutilized by the everyday rich. But a will can control the alienation of assets you haven't included in your trust, and you can create a will to transfer to your trust any assets you hold at the time of your death, if you haven't already done so. If your net worth is significant, you may need to pay attention to estate tax with both wills and living trusts. The minimum net worth necessary for a single person to consider using a revocable living trust will vary from state to state.
Items listed in trusts will be distributed upon death; dispersing everything in 4 ways and dissolving irrevocable trusts. There are several types of irrevocable trusts that are used to avoid the impact of estate tax, such as a grantor-retained annuity trust or GRAT; limited-access trust for spouses or SLAT; or qualified personal residence trust or QPRT. The grantor may select a successor trustee to administer the trust if the grantor is unable to do so or dies. This means that a trust can provide protection and direct your assets if you become mentally incapacitated, something that a will cannot do.
The main feature of a living trust is that it appoints a trustee to manage and distribute the trust property after your death, and this replaces the executor who works with the probate court. With revocable living trusts, the grantor is still considered the owner of the trust assets, even though a separate entity is formed because the trust can be modified at any time. A trust can make provisions for things like what you want to happen if you become mentally or physically unable to make your own decisions. .
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