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Trusts

 

Trusts

A living trust is a legal document that contains your instructions on how to manage your assets if you are unable to and to direct their disposition upon upon your death. After the trust trust instrument is drafted and signed, you transfer assets from your name into the name of the trust. If you are the trustee, you still control the assets, as provided by the trust term. However, unlike a will, a living trust avoids probate at death.

The living trust can control all of your assets and can prevent the courts from controlling your assets if you become incapacitated. Unlike a will, a living trust does not have to die with you. Assets in the trust can be managed by the trustee, whom you have chosen, as you designate.

A trust also allows you to provide for those loved ones for whom you have special concerns, such as in a special needs trust for child with a disability.

A living trust should not be confused with a "living will." The living trust governs your financial affairs. The "living will" is for medical affairs.

Generally, a person, no matter how old they are, how much they own, or whether they are single or married, should consider a living trust. If you own assets which are held in your name, such as a home or certificates of deposit at a financial institution, and want your loved ones (spouse, children or parents) to avoid the problems of court interference at your death or incapacity, you should consider a living trust.

Here are some quick answers to how a living trust operates: Usually the living trust is revocable which allows you to make changes at any time you wish. The person under the trust who controls the trust assets is call the Trustee. You are usually the trustee and therefore you control the assets which you transfer to the trust. At death, the successor trustee, whom you designate, takes over and is required by the trust document to pay debts and distribute the trust assets in accordance with the terms of the trust which you have created. There is no probate of your assets which are held by the trust.

The successor trustee can be an individual, professional trustee or corporate trustee (bank or trust company). People usually designate a corporate trustee or professional trustee to act as the sole successor trustee or as a co-trustee with a family member if they believe that the family member will not have the time, ability or desire to manage the trust.

The set up cost of a living trust is usually higher than a will, but when compared to the cost of probate and loss of control that comes at the time of death or incapacity, it is often far less expensive. The lawyers at Phelps Law Group will help you decide whether these cost savings of a living trust are better for you. We can provide you with a estimate of the cost of preparing the living trust and transferring the assets which you want to have held by the trust. Additionally, you should recognize that there may be costs in administration of your trust following your death. Your successor trustee may charge for her time and retain a lawyer to assist her with administering the trust. A corporate or professional trustee will charge fees associated with the work he performs.

If you have a living trust prepared we recommend that you also prepare a will. This will is often referred to as a "pour-over will" and acts as a "safety net," as it transfers any assets to your trust which you may have forgotten. In this event, where some of your assets are not titled in the name of your trust, these assets would be subject to probate, but what happens to them will be controlled by your living trust because of the terms of your pour over will.

 
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