A living trust is a legal document that can be used to establish a trust for any assets that the creator wishes to transfer into it. The person can continue to use the assets placed in the trust, but they will be owned in the trust’s name.
The creator can designate a trustee responsible for managing the assets in their trust. After the creator’s death, the assets in their trust are transferred to their designated beneficiaries.
Living trusts are an effective estate planning tool as they can be used to avoid probate. That said, a living trust may not prevent every potential problem. To determine whether a living trust is right for you, discuss your needs with an estate planning attorney in Santa Rosa.
What Property Can Be Placed in a Living Trust?
There are several types of assets that can be placed in a living trust. This includes stocks, bonds, security accounts, small business interests, patents, and copyrights. However, you cannot put life insurance and certain retirement accounts in your living trust.
Will My Living Trust Avoid Estate and Probate Taxes?
A revocable trust will not avoid estate taxes applied by the state or federal government. A special type of living trust known as an AB trust avoids taxes and passes assets directly to the beneficiary. Since living trusts do not pass through probate, your living trust can help you avoid probate fees and other costs.
What Are the Pros and Cons of Living Trusts?
Living trusts offer a whole host of benefits. Your living trust will allow your estate to avoid probate which has a reputation as a painstakingly slow process. It can drag on for months, even years depending on the complexity of an estate.
With a living trust, you will avoid the costs associated with probate and your beneficiaries will not have to obtain permission from the court to access the funds in your bank accounts. You can choose to delay distribution to later dates (for example, on your beneficiary’s birthday). Since a living trust is not probated, it does not become a public record.
Like every other estate planning tool, living trusts have some disadvantages. Your trust can only control the assets you transfer into it. If you forget to change ownership of an asset, it won’t be covered by your living trust. You will have to pay upfront to have your trust document prepared. This cost can be more than the cost involved in having a will created and probating a small estate.
How Can I Create a Living Trust?
To create your living trust, first, obtain a living trust form for your estate. Fill out the form and have it signed in front of a notary. Remember to name a trustee. Hire an estate planning attorney near you to create the terms of your trust.
Still cannot decide whether you should create a living trust? Let Johnston Thomas Law help. Once we analyze your current and future financial goals, our team will come up with a strategy to fit your needs. To consult one of our attorneys, call (707) 545-6542.