Living Trust: Is It Helpful?

 A living trust is a useful tool for managing one's inheritance, especially when it comes to determining how (and to whom) one's assets should be distributed after death.

A living trust is used to give people more control over their assets and to ensure that their desires are carried out after they pass away. Probate can take up to three years and cost up to 10% to 15% of an individual's estate's worth, thus a living trust can assist save money and time. Setting up a trust can also provide you with greater privacy than a will because you don't have to register it with the courts.

How do Living Trusts work?

Living trusts are administered by a trustee, who has a moral duty to manage the trust responsibly in the best interests of the trust's beneficiary or beneficiaries, as determined by the trust settlor, also known as the grantor. Following the settlor's death, these assets are distributed to the beneficiaries in accordance with the grantor's desires as stated in the trust agreement.

A living trust, unlike a will, is in effect while the settlor is still alive, and it does not need to go through the courts to reach its intended beneficiaries when the settlor dies or becomes disabled.

Types of Living Trusts

• Revocable Trust

The most frequent type of living trust is the revocable trust. People refer to it simply as "a living trust" or "a living revocable trust,"

because, as the name implies, the grantor can amend or revoke (cancel) the trust at any moment. This is not an easy task, but it can be accomplished, making it a versatile alternative.

The assets of a revocable trust can be moved around, and the trust's structure is fairly flexible. It can be changed at any time, and it can also be revoked. A revocable trust is a fantastic place to start if you're seeking an estate planning vehicle that gives you privacy and control over your assets.

• Irrevocable Trust

The irrevocable trust is in effect and cannot be altered by anyone, including the grantor. A judge would have to decide whether a change could be made, and even then, the circumstances would have to be exceptional. As a result, the revocable trust is a more popular alternative. In fact, some persons may start with a revocable trust and eventually convert it to an irrevocable trust (once they're more convinced of their decisions).

Another thing to keep in mind regarding both types of living trusts is that when the grantor passes away, their revocable trust immediately becomes an irrevocable one (because the only person who could have changed it has passed on.)

• Is a Living Trust necessary for me?

In the event of an accident or untimely sickness, having a living trust can help ensure that your assets are administered according to your desires and that your designated beneficiaries receive your assets.

In general, a couple with a residence and/or children may profit from a living trust since their assets and heirs can bypass the time-consuming and expensive probate process.

The trustee might handle the assets in your living trust and distribute them according to your wishes without the need for court intervention. Your assets and their worth (as well as the identities of your beneficiaries) would not enter public records because the trust would not be managed by the probate court.