Reasons You Should Have a Living Trust

How Do Trusts Work?

You have probably heard of trusts or trust funds. Trusts represent a financial relationship between a trustor, trustee, and beneficiary. The trustor is the person who creates the trust; sometimes, the trustor is referred to as the grantor or settlor. The trustor authorizes the trustee to hold and control specified property and assets for a third party, the beneficiary.

The goal of a trust is to protect the named property and assets and ensure they are allocated according to the trustor's wishes. Additionally, trusts can save time and paperwork, and in some cases, can help beneficiaries avoid inheritance and estate taxes. Trusts essentially provide guidance and instructions on how a person's money and assets should be managed during life and after death. In short, trusts are an important part of estate planning.

What Is a Living Trust?

A living trust is a type of trust in which the grantor, while still alive, designates a trustee to manage their assets. After their death, the grantor's assets are distributed to their named beneficiaries. The trustee manages the trust with the best interests of the beneficiaries in mind. This type of trust is designed to streamline the transfer of assets to the beneficiary after the grantor's death. Because a living trust is already in effect, it doesn't have to go through the lengthy and expensive probate process when the grantor dies.

The Benefits of Having a Living Trust

Living trusts are a great option if you are looking for a way to effectively manage your estate, preserve your wealth, and secure assets for future generations. If you die without a living trust or will, the courts will be responsible for distributing your assets. Living trusts allow you to identify how you would like your estate handled after your death and the specific beneficiaries you would like to inherit. This guidance is particularly valuable for your surviving relatives and descendants.

Another advantage is to preserve your privacy. Because wills must go through the probate process, it is entered into the public record. This means that the value and inventory of your state will also be made publicly available. Living trusts are private documents.

Living Trusts Are for Everyone

Many people are surprised to hear that most people can benefit from a living trust. If you own property, have minor children to provide for, or have assets to leave behind, you may benefit from establishing a living trust. A living trust can be used to secure an inheritance for children or to name charitable beneficiaries. They are also beneficial to ensure that dependent adults or children with special needs are taken care of in the event of your death or incapacitation. You can also use a trust to designate funds and instructions for burial and funeral plans.

Trusts are not just for preserving your wealth for your beneficiaries. They are also important for people who are looking to protect their own future in case of incapacitation. This is especially important for single people and the elderly. If you suffer an accident or become mentally incapacitated, your trustee can use your trust to ensure you receive the care you need. Within your trust, you can outline your preferred healthcare plans, ensuring you are taken care of according to your wishes.

To get started with a living trust, call Cali Law at (508) 252-8186 or contact us online.