19 Sep 2011

Living Trusts

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Living Trust

living trust is not as complicated as it may sound.   It is simply an arrangement where one person, called a trustee, holds legal title to property for another person, called a beneficiary. As the creastor of your trust, you (and your spouse) will be the trustee of your own living trust, keeping full control and power over all property held in trust.

living trust may also be called a revocable living trust or simply a revocable trust.
It is called living trust because it is created while you’re alive, rather than upon your death.   With a living trust, you lose no control over your property or other assets, as you may freely change or revoke it at anytime.  Also, you pay no additional taxes or file any additional tax returns.   And because you (and likely your spouse) will be the sole beneficiaries of the living trust while you are alive, so your children or other beneficiaries will have no legal claim to your assets until after you die.

living trust is merely a standby device that springs into action if you die or become disabled.   It’s not hard to understand: just think of it as a “will substitute” or a substitute for a will, but unlike a will, a living trust it allows you to avoid the expense, time and publicity of going to court to do a death probate or living probate.

Death Probate

death probate is the process of going to court in order to transfer your property to your children or other beneficiaries.   You are basically asking for the courts blessing to transfer your property to your intended beneficiaries.   A death probate will thus involve hiring lawyers and submitting to the legal process.   The cost and time involved can vary from one jurisdiction to the next.   Also, because a death probate is a public record, in many jurisdictions, virtually anyone can get into the court record and determine assets and who will inherit them.  Gaining access to court records is another common way to commit identity fraud and possibly elder abuse and elder fraud.

Living Probate

Living Probate is the process of going to court to have someone appointed to a disabled or incapacitated person’s estate.   It is also called a guardianship or conservatorship.   This happens when a person is no longer able to manage their own financial affairs, so someone has to be appointed to manage it for them.    A person in this condition can easily be the subject of elder abuse or elder fraud.  Also, because living probate is a court process and public record, the person seeking appointment as guardian will incur attorneys fees and court costs, time as well as publicity.     A well drafted living trust may avoid the entire process of living probate, saving you the unnecessary expense, time and loss of privacy of a living probate.  Not all trusts are properly drafted, however, and many may not avoid living probate.

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