Creating a Living Trust
What is a Living Trust?
A living trust is created while you are alive and funded with the assets you choose to transfer into it. The trustee (typically you) has full power to manage these assets.[1]Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.
A living trust will also designate a beneficiary, or beneficiaries, much like a will, to whom the assets are structured to automatically pass upon your death.
If you create a revocable living trust, you may change the terms of the trust, the trustee, and the beneficiaries at any time. You can also terminate the trust altogether.
A living trust is a popular consideration in many estate strategy conversations, but its appropriateness will depend upon your individual needs and objectives. Work with a Wealth Alliance Advisor to help you navigate the process!
Why Create a Living Trust?
The living trust offers a number of potential benefits, including:
AVOID PROBATE
Assets are designed to transfer outside the probate process, providing a seamless and private transfer of assets.
MANAGE YOUR AFFAIRS
A living trust can be a mechanism for caring for you and your property in the event of your physical or mental disability, provided you have adequately funded it and named a trustworthy trustee or alternative trustee.
EASE & SIMPLICITY
It is a simple matter for a qualified lawyer to create a living trust tailored to your specific objectives. Should circumstances change, it is also a straightforward task to change the trust’s provisions.
AVOID WILL CONTESTS
Assets passing via a living trust may be less susceptible to the sort of challenge you might see with a will transfer.
The Drawbacks of a Living Trust
Living trusts are not an estate panacea. They won’t accomplish some potentially important objectives, including:
- A living trust is not designed to protect assets from creditors. It is also considered a “countable resource” when determining your Medicaid eligibility.[2]The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for … Continue reading
There is a cost associated with setting up a revocable living trust. - Not all assets are easily transferred to a living trust. For example, if you transfer ownership of a car, you may have difficulty obtaining insurance, since you are no longer the owner.
- A living trust is not a mechanism to save on taxes, now or at your death.[3]The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for … Continue reading
Trust Administration
The person or organization that you name as the Trustee in your estate planning process is one of the most important decisions you will make. You can rely on the knowledge and experience of your Wealth Alliance Advisor to help you navigate the choices that are available to you.
Here’s some helpful information from Fidelity on why naming the right trustee is critical.
References
| ↑1 | Using a trust involves a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations. |
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| ↑2 | The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. |
| ↑3 | The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. |