Living Trusts are also called revocable trust and inter-vivos trust.
A Living Trust does not go through probate because the document is considered a contract. The trust tells a story. It says what happens and how to treat the assets in the trust when you are healthy, when you are incapacitated, and when you die. You are able to leave assets to main beneficiaries like your children, secondary beneficiaries like your grandchildren, and final beneficiaries like your brother and sisters.
Living Trusts do not cause you to pay extra taxes. It does not raise your tax rate. In truth it is no different than how you pay taxes now. A Living Trust uses your social security number.
The great part about a Living Trust is you can change it as often as you want. It is advisable that you put your changes in writing and have the writing notarized. NEVER write changes on your trust unless you are giving it to your attorney as guide to make changes. The one thing you do not want to do is create doubt as to your intentions. Additionally, you can put assets in and take them out. Finally, you can completely revoke the trust.
The person who takes care of the trust is called a Trustee. Originally you are Trustee. Then you choose someone else. You can have a bank or trust company be a trustee. If you use a financial planner they can continue to manage your money. A provision can be added to say that.
The great thing about Living Trusts is they are completely flexible. The trust can be written to address every unique family situation. If your family situation is unique you want to go to an experienced estate planning attorney. However, there are all types of ways to address different family situations. If you have a blended family and you have two concerns: 1) take care of the surviving spouse, and 2) make sure that your children are not disinherited. You can leave your spouse assets in a QTIP trust. The trust income goes to the surviving spouse monthly. The principal of the trust goes to the spouse for health, education, maintenance and support. Upon the death of the spouse the remaining money goes to the children you designated before you died. Your spouse does not have the power to change the beneficiaries of the QTIP trust.
Additional ways the trust are very flexible are putting in provisions for children, grandchildren, guardians, and holding back distributions, etc. The important part of trust design is to be open and honest in the attorney meeting so the attorney can deal with all issues in the document.
Living Trusts are not a matter of public record. For some families a big issue is privacy. They do not want extended family to know the terms of their trust or their trust assets. Probate is a matter of public record. The will is public along with the list of assets and the values. Any extended family member who wants to look can look. In terms of the Living Trust, if any extended family member were named as beneficiary he/she would be entitled to copy of the Trust at the death of the grantor (person who established the trust).
The final benefit to a Living Trust is it can be administered very quickly. Most trusts take 6 to 8 weeks to administer. Selling real estate is usually the one thing that can hold up closing the administration of a trust.
For more information about a Living Trust contact an estate planning attorney at DBL.