Why Would I Want a Living Trust?

Jan 31, 2014

All trusts are not intended to accomplish the same objectives. Some types of trusts are used by wealthy individuals to gain tax efficiency. If you have an estate that is valued above $5.34 million, you are exposed to the federal estate tax. Under these circumstances you have to take certain steps to mitigate your exposure.

Because people know that wealthy individuals use trusts for tax purposes, many assume that trusts are only useful for multimillionaires. In fact, there are trusts that don’t reduce estate tax exposure. One of them is the revocable living trust.

Avoiding Probate

Revocable living trusts are used to avoid probate. They don’t have value for those who are seeking estate tax efficiency.

Probate is a legal process, and it will come into play if you use a last will to direct the transfer of your assets after you die. The heirs that you name in your last will do not receive their inheritances right away. The bequests will not be distributed until the estate has been closed by the probate court.

This is something that is not going to happen overnight. Probate can be a prolonged process. At minimum it will take a number of months, and at maximum probate can take years.

If you were to use a revocable living trust rather than a last will to direct the transfer of your monetary resources after your passing, the time consuming process of probate would not be a factor.

Revocable Living Trusts

At first you do not have to relinquish control of assets that you convey into the trust. You can act as both the trustee and the beneficiary while you are living. This is why these trusts do not provide estate tax efficiency. You are retaining incidents of ownership when you create and fund a revocable living trust.

You name successors to assume these roles after you die. After you do in fact pass away, the trustee that you name to succeed you distributes assets to the beneficiaries in accordance with your wishes as stated in the trust agreement.

Your beneficiaries will receive these distributions outside of the process of probate. This means that they will receive their inheritances in a timely manner.

When you create a revocable living trust and name a successor or disability trustee, this individual could step in and administer the trust in the event of your incapacity. This is another one of the advantages that you gain by creating one of these trusts.

A revocable living trust can be a good choice if you want to make things simple for your loved ones. To learn more about them, contact our firm to request a free consultation.

We are grateful you follow us and value your comments and input.  You Can Also Find Us Online: Facebook | Twitter | LinkedIn Thanks again.

Ryan M. Denman and Dennis D. Duffy

Duffy Law Office, PLLC

 

 

 

 

Page Tools

  • Share this page SHARE
  • Print Friendly and PDF

Other Articles You May Find Useful

Attorneys Want to Help
Who Can Act as a Living Trust Trustee?
Attend a Free Estate Planning Seminar
How Is Property Distributed If There Is No Last Will?
What Happens to a Living Trust When One Spouse Dies?
Can I Just Plan My Own Estate?

Leave a Reply

  • (will not be published)

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>