Whether you are starting a family or are retiring from work, you may want to think about organizing your estate. An unexpected accident may leave you incapcitated and unable to make arrangements. Yet, with an estate plan in place, you can rest assured that your property is taken care of.
As part of the estate plan, you may wish to include a living trust. This document can give you peace of mind that all of your affairs are in order if something should happen.
What is a living trust?
A living trust is a document or legal entity, created to hold and safeguard a person’s assets and property. A trustee is appointed to manage the property and assets in a way that will benefit the beneficiaries once the trust owner passes away.
These trusts are often classified as revocable or irrevocable. Revocable trusts allow creators to act as the trustee and modify the document’s terms at any time during his or her lifetime. The terms of irrevocable trusts, on the other hand, are set in stone once the creator signs the final documents.
What are the advantages?
Once you pass, any property and assets you have placed in the trust are transferred to the designated beneficiaries according to the terms you named in the document. This process allows the property and assets to bypass the probate process, which may be required for items that are left in a last will and testament.
Other common benefits of a living trust include the following:
- The terms of a trust are private and are not a matter of public record like those of a last will and testament
- The terms of a trust may be customized to fit a specific payout schedule
- The trust may save money by avoiding probate fees and other court expenses
- A trustee and backup trustee may be appointment to handle affairs should you become incapcitated
In a living trust, you can customize the payout of assets and property. For example, if the beneficiary is a child, you can state that the child will not receive assets until they are a certain age. You may add the requirement that the child must finish college before he or she receives the property, or that the child can only use the money to pay for college. Furthermore, you may set up the trust to make payments to the beneficiaries as you see fit.