Life is the period between birth and death. Many people live a fulfilled life yet when they are gone without any trust or will, there is a tendency for misunderstanding between family members. What have you done to ease the stress and burdens off your family in the event of your death? No matter the value of your assets, it is essential that you plan for what will happen to them after your demise. A living trust gives you peace of mind because your wishes will be followed after your death. Hence, this text serves you with all you should know about the Living trust concept including its overview, cost, templates, its pros and cons plus a writing guide
What Is a Living Trust?
A living trust is a legal document you create during your lifetime spelling out your assets and investment entrusting it to another person or legal entity while you still have control over it. you determine who receives your assets after you die. .It’s called a “living trust” because, once
created, it takes effect immediately while you are alive. Oftentimes, it is also known as a revocable living trust because you changed or entirely revoke it according to your wishes for as long as you live. However, before any document can be identify as a living trust documents There must be a creator, often called the “trustor” or the “grantor.”There must be assets, which is the “trust.” There must be a trustee to hold and manage the assets. lastly the person for who the trust is for known as the “beneficiary.” You can equally agree with me that it is simply a three-party financial arrangement where one party (the trustor) gives a second party (the trustee) the ability to hold assets or property for a third party (the beneficiary).
Image Credit: ldahelp Living Trust
Types of Assets you may Transfer to a Trust
1. Deposit accounts held at banks and credit unions
2. Life insurance policies
3. Business interests and assets
4. Real property, including homes, land or investment real estate
5. Investments, including stocks, bonds and money market accounts
6. Collectibles and antiques
Types of Living Trust
A Living trusts are either revocable or irrevocable. Let’s pinpoint these primary types of living trusts.
Revocable Trusts
Revocable trusts, allows you to control, maintain, change or dissolve a revoke a trust. If in case of divorce or acquire new assets, you may need to update the terms covering the trust to reflect the consequences of those events. It is not a permanent trust until u pass away or incapacitated to handle those assesets. This kind of trust are not subject to probate because the assets in the trust are given to beneficiaries without having to go through the probate court. Therefore its always difficult for creditors to claim assets in a revocable trust in order to satisfy any outstanding debts.
Irrevocable Trusts
An irrevocable trust, cannot change or modify it in any way or by any means. There is less flexibility because If you transfer real estate or other assets you own to the trust, you can’t undo them.
Advantages of a Living Trust
Though a Living Trust is similar to a Will, outstandinly,there are key differences. Many people find a Living Trust to be a preferable alternative with the advantages below:
- Preserve assets for the care of minor children in the event of your demise.
2. Pass on assets without going through probate or other forms of public documentations which is requirement for wills.
3. Create a plan for managing personal or business assets if you become incapacitated
4. Establish rules or requirements for beneficiaries to meet receiving their inheritance
5. Living Trust is generally done by the Trustee without interference from the or involvement, and so it doesnt become a public record.
6. Set aside assets to care for a special dependant’s needs
Disadvantages of a Living Trust
- You’ll still need an estate plan
- Your heirs have longer to contest a trust
- funding a trust is highly expensive
- It involves additional paperwork
Cost for Living Trust?
This is one of the estate planning options to protect your assets and your loved ones after your demise. Trust costs varies depending on which method you use to set them up either by hiring an attorney or to form it yourself. In hiring an expert or attorney to help build you a trust, it might cost about $2,000. The cost for living trust also varies depending on location. African charges may high and Americans low but put into consideration the DIY approach in creating a living trust with less cost though its a bit riskier. One of the reason you should consult and attorney despite the cost for a living trust is to ensure your trust legal documents are correctly prepared.
Writing a Living Trust
A living trust is one of the most important documents you draft in your lifetime. Get informations before the business of writing a living trust with the following steps underlined.
- In writing a living trust, Make a List of your tangible items like your house, car and jewelry stocks, bonds and life insurance policies. Writing a living trust list gives you an insight of distributing them in case you die. Make do with draft paper work including titles, deeds, stock certificates, policies, ready to be given to the attorney that will prepare your living trust documents. With all these your attorney will kick off as your assets will need to be transferred to the trust for funding.
- However, you will have to also choose a beneficiary, a guidance for your minor children and a successor trustee.
- Thus, you cant designate a guardian for your minor children through a living trust, but consider who you will take care of them in case of your death. In addition, You can be the trustee so you continue to have control over your assets during the course of your lifetime. Optionally, when writing a living trust you can also choose a trusted and reliable person on your behalf.
Living Trust Template
This living trust template explains how the Grantor’s Trust should be managed while they are alive and how to distribute it once they die. There are major concise details a Grantor should include in a living trust trust template for clarity sake
Family Description
Indicate Marital status with the name of your spouse, specifying number of children (if any). For this purpose children include both those that were born to the Grantor those legally adopted. It should also include provision for the future children. All children should be in description, even if the Grantor doesnt plan to include them in in the Trust. With this, the Judge can be sure that the Grantor really wants to disinherit a child and did not mistakenly overlook them in the living trust template/Agreement.
Include a Trustee
The Trustee is in charge of managing the Trust assets, making payments of the Trust income to the Grantor. This necessary because he/she distributes the assets to the beneficiaries on the agreement after the grantors demise. Be sure that your trustee is 18 years or older and have not been convicted of a felony. Sometimes, a Grantor serves as an initial Trustee, then chooses a successor Trustee to assume the role once he becomes disabled, no longer wishes to manage the Trust, or dies.
Description of Assets
The Grantor should describe in detail the assets they plan to transfer into the Trust. Then transfer these assets with a Bill of Transfer for the transfer of tangible personal property, a Trust Letter to a Bank for the transfer of the contents of a bank account, broker forms for the transfer of stocks and bonds, and a Change of Beneficiary documents for the transfer of a life insurance policy.
Beneficiary’s Name
This is the most important parts of a Trust template. It requires the name of the is the beneficiaries to inherit those assets after the Grantor’s demise. It is also an avenue for leaving or making specific people to inherit specific possessions, property, or cash assets. Dont forget to include names who will who will inherit the residue, or remainder, of your Trust. Remember to also include alternate beneficiaries in case the people they have initially named die before them
Signatory
After completion and thorough review of Trust Agreement making sure that wishes are accurately intact, sign, stamp and date the Agreement in front of three witnesses. The witnesses should also sign, attesting that the Grantor was of sound mind and had the capacity to make these decisions when they signed. Mandatorily, the Grantor should number and initialize the bottom of each page of the Agreement and include a notary page to notarize for precautions.
Warning: Keep these documents safe , or send copies to trusted persons.
Conclusion
Living trusts are one of the options you can use to protect your assets and your loved ones after your demise. The costs vary depending on location and method applicable to them. Thus you can hire an attorney or you form it yourself.
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Disclaimer!
Note: This document is not meant to give legal advice. You are not to rely on the limited information given here . Before subscribing to any information in the text, you are strongly advised to consult with a competent attorney in this area of the law.
