Estate Planning in Frederick, Maryland: Understanding A Living Trust
What is a living trust?
A Living Trust is a document which establishes a legal vehicle to own and manage assets during your lifetime. It additionally provides a way to have your estate planning intentions implemented upon your death. Living Trusts are “revocable,” or changeable, which allows you to change or remove assets that were placed in the trust. Living Trusts allow you to be the Trustee in control of your assets. Should you become disabled, a Successor Trustee can be appointed. Upon your death, the Trust is no longer revocable. Assets in the Trust are either distributed to your beneficiaries as directed, or allows assets to remain in trust for your beneficiaries. A Living Trust provides a way to manage assets during your life, and to transfer assets upon your death, outside of the public’s view.
Why should I make a living trust?
Privacy
Many people choose to create Living Trusts to ensure the private direction and control of their assets. When you create a Living Trust, you either control the assets yourself, give control to someone you trust, or give control to your preferred financial institution. These appointments are made without court involvement or public scrutiny. The trustee controls assets titled in the trust. This is usually the individual that created the Trust while the individual is in good health, and provides for a Substitute Trustee in the event of disability or death of the creator of the Trust.
Avoiding Probate Costs
Many people prefer Living Trusts as an estate planning vehicle. Assets titled in a Living Trust when the beneficiary dies are not subject to probate proceedings.
Is it expensive to create a living trust?
Living Trusts are usually much more complex documents than simple wills and simple trust wills. They are usually more expensive to create and fund than the costs associated with the preparation of a will, although this will vary depending on the assets and other factors. The cost of the Living Trust also depends on the assets that are transferred to the Trust and the planning associated with making these decisions.
Will I lose control of my assets?
A properly prepared Living Trust leaves you completely in control of your assets in the Trust while you are healthy. If you become incapacitated, it usually provides for a trusted, loved one to take over control of the assets of the trust for your benefit while you are incapacitated.
If I make a living trust, do I still need a will?
While a Living Trust can potentially provide for the disposition of all your assets upon your death, you can’t predict what assets you will have at the time of your death. Hence, it is strongly recommended that a Will is prepared to work with the Trust so that assets not titled in the Trust at the time of your death paid to the Trust by a “pour over” Will.
In summary:
Pros
- Saves significant fees & costs for probate
- Keeps estate private – not a public record
- Flexibility to easily add or remove assets
- Easy to revoke or change
- No need to file separate tax return for the trust
- Seamless transition to substitute Trustee in the event of a disability.
Cons
- Significant upfront fees and costs
- Logistics of changing title to assets, names on accounts, etc.
