A living trust is a legal document that outlines how you would like your assets to be distributed after you pass away. You can name a trustee to manage the trust, and beneficiaries who will receive the assets. A living trust can be revocable or irrevocable, and there are pros and cons to each type. So, what is the point of a living trust? And what should you choose in 2022?
What is a living trust?
A living trust is a legal arrangement in which someone (the trustee) holds assets on behalf of another person (the beneficiary). The trustee has a fiduciary duty to manage the assets in the trust for the benefit of the beneficiary.
There are two main types of living trusts: revocable and irrevocable. A revocable trust can be changed or canceled by the grantor at any time, while an irrevocable trust cannot be changed once it has been created.
Living trusts are often used to avoid probate. Probate is a legal process that can be expensive and time-consuming. When a person dies, their assets must go through probate before they can be passed on to the beneficiaries. If a person has a living trust, their assets can be passed on to the beneficiaries without going through probate.
Living trusts can also be used to protect assets from creditors. If a person owes money to creditors, their creditors may try to seize their assets. However, if those assets are in a living trust, the creditors cannot seize them.
Overall, living trusts offer several benefits. They can help to avoid probate and protect assets from creditors. They can also give people peace of mind Ready to start creating a will or trust with Barrattorneys Company?
The downsides of a living trust
- A living trust is not right for everyone. There are some downsides to consider before deciding if a living trust is right for you.
- One downside of a living trust is that it can be expensive to set up and maintain. You will need to hire a lawyer to help you set up the trust, and you will need to pay annual fees to keep the trust in good standing.
- Another downside of a living trust is that it can be difficult to change or cancel once it is set up. If you decide later that you no longer want the trust, you will need to go through the process of dissolving it, which can be complicated and time-consuming.
- Finally, a living trust can be complex and confusing to understand. If you are not comfortable with legal documents, you may want to consider another option.
What to do if you don’t have a living trust
If you don’t have a living trust, there are still things you can do to protect your assets and your family. You can create a will, which is a legal document that specifies how you want your assets to be distributed after you die. You can also create a power of attorney, which gives someone else the authority to make financial decisions on your behalf if you become incapacitated.
You can also consider setting up a revocable trust, which is a type of living trust that allows you to change the terms at any time. A revocable trust can be a good option if you’re not sure how you want to distribute your assets or if your circumstances may change in the future.
Ultimately, the best way to protect your assets and your family is to consult with an experienced estate planning attorney who can help you determine what type of trust is right for you.