What You Should Know About Living Trusts

 Posted on July 12, 2018 in Estate Planning

When you are beginning to prepare an estate plan, it is important to remember that you are not just planning for the time after your death. An estate plan is necessary for more than just the rich—though that designation can be quite misleading. An estate plan is an outline set up by anyone—including those in lower- and middle-class income sectors—that determines what will happen to one’s assets and property. For those who may tend toward the higher end of the socioeconomic spectrum, it may be in your best interest to establish a living trust, which is a tool that can be used to manage your assets while you are still alive. Among other benefits, living trusts can useful in protecting certain assets and maintaining eligibility for government financial aid programs such as Medicare and Medicaid.

Two Types of Living Trusts

There are two main types of living trusts: irrevocable and revocable. The vast majority of living trusts are revocable, meaning that they can be amended or revoked at any time by the creator. When you create a living trust, the assets you select are transferred to the trust and ownership is in the trust’s name rather than in the name of an individual. Your designated trustee then administers the trust, meaning that the trustee makes decisions for the leveraging, sale, or gift of any assets in the trust. Most people name themselves the trustee of their own living trusts, meaning that there is essentially no difference in the way that one administers his or her own assets—only that they are now technically owned under the umbrella of the trust.

Successor Trustees

You can and should, however, name a person who will become the trustee if you are unable to continue to carry out the responsibilities and requirements of doing so. Many people often appoint a grown child or trusted friend to be a trustee to take over the administration of the trust should he or she become too ill or disabled to do so. This successor trustee will also be responsible for managing the trust and carrying out its terms after your death. Unlike a will, no public record is required when it comes to a living trust, meaning that a trust better maintains the privacy of the individual and his or her family.

Call Us for Help

If you are ready to begin the process of estate planning, or if you have more questions about living trusts, contact a Lombard estate planning lawyer at A. Traub & Associates. Call 630-426-0196 for a confidential consultation at any of our three locations today.

Sources:

http://money.cnn.com/pf/money-essentials-wills-trusts/

http://www.americanbar.org/content/dam/aba/migrated/publiced/practical/books/wills/chapter_5.authcheckdam.pdf