A living trust is a revocable trust that you create and transfer assets into. You can change the terms of the trust at any time and you can even decide to terminate the trust. It is an alternative to an irrevocable trust, which once created cannot be modified.
Living trusts have many advantages but they also have some important limitations that you need to be aware of. When you make decisions about whether you need a trust- and what type of trust you need- it is important to understand what the different kinds of trusts can actually accomplish.
A Smithtown, NY living trust lawyer can provide you with help understanding what kinds of trusts will meet your goals. At Eghrari Wealth Training Law Firm we not only offer you advice on trust options but we will also help you with the logistics of creating and funding a trust. Give us a call today so we can start on creating your plan to use trusts to accomplish your financial and personal goals.
Is a Living Trust the Right Choice?
A living trust is used effective for many different purposes. One of the main reasons why people create a living trust is so that they will be able to name someone who will be in charge of managing assets in case of incapacity.
When a living trust is created, the trust creator, or settlor, is typically named as the trustee. The trustee oversees and manages the assets in the trust. The trust document used to create the living trust should also name a backup trustee. By doing this, the backup trustee can immediately take over and begin managing trust assets in case of incapacity.
When you have property or significant investments, you need to make sure someone is watching over these assets, making decisions on them, and managing them so they are kept safe and growing. In case of incapacity, you can no longer manage your money and property on your own. Having a backup trustee ensures that all of the different assets which are in your living trust are not going to be lost due to mismanagement if something happens to you.
When and if you pass away, your backup trustee will also facilitate the transfer of assets kept within the revocable trust to the heirs who are going to inherit the money you have left them. The trustee has a fiduciary duty to act in the best interests of the trust beneficiaries, so you can be confident that the trustee will both manage the assets properly when you are alive but incapacitated and will also ensure that the transfer of assets to heirs is seamless.
Another big benefit of creating a living trust is to allow your assets to transfer outside of the probate process. The probate process is triggered upon a death and involves going to court where a determination is made on the validity of the will.
Probate can take a long period of time, and it has to be overseen by an executor who is named in the will- which can be stressful for an executor. Your heirs will have to wait to inherit until the probate process is completed. When a living trust makes it possible to opt out of probate, all of these issues are eliminated. Instead of having to deal with legal process after your death, beneficiaries can inherit seamlessly and quickly through the process of trust administration.
While these are big benefits of a living trust, there are also major limitations as well. For example, according to New York City Caregiver: “Revocable living trusts generally are not devices for reducing income, estate or gift taxes, nor will they help in protecting assets for the purpose of qualifying for Medicaid and other such programs with limits on the resources and income of the recipient.”
There are other types of trusts you can use if accomplishing these things are your primary goal.
How a Smithtown Living Trust Lawyer Can Help You
A Smithtown estate planning lawyer at Eghrari Wealth Training Law Firm can provide you with the advice on whether you want a living trust, an irrevocable trust, or both. Your attorney can also provide assistance with transferring assets into your trust and with all other aspects of creating a successful estate plan to provide for your loved ones.
Give us a call at (631) 265-0599 or contact us online to learn more about how an experienced lawyer can help you. You can also download our estate planning checklist to find out more about living trusts and their role in your comprehensive estate plan.
- What You Need to Know about Medicaid’s “Look-Back” Rule - February 1, 2023
- What You Need to Know about Elder Financial Exploitation - January 25, 2023
- What Is an Asset Protection Trust? - January 18, 2023