The probate process is expensive, time-consuming, and public. In addition,
probate is a burden borne by the people you leave behind, at a time when
they are already grieving. With a living trust, you can take care of everything
yourself and know that your death won’t place the burden of probate
on your loved ones.
There are some other benefits to a living trust, in that you can set up
a plan for what happens to your assets if you become incapacitated. This
is important; if you became disabled or are no longer competent to manage
your assets and you don’t have a living trust, someone will have
to go to court and set up what’s called a conservatorship, which
is a very expensive and time-consuming process that is possibly even more
burdensome than probate. But if you have a living trust, if something
like that happens to you, the successor trustee can step in and manage
your assets for you according to the guidelines that you established.
That’s the second major advantage of setting up a living trust.
What Are Other Common Types of Trusts?
Another common type of trust is what’s called a Special Needs Trust.
Say a grandfather wants to give his granddaughter some money, but the
granddaughter has special needs and can’t manage the money herself.
The grandfather can put the money into a Special Needs Trust and set it
up for her.
If you set it up correctly, if the granddaughter is already getting Social
Security or Disability benefit, those don’t necessarily have to
be affected. However, to set it up properly, as a supplement to her benefits,
there are laws regarding public benefits to consider, so you’ll
need an attorney to set it up.
Sometimes the situation might be slightly different; for example, the granddaughter
may not be getting public benefits, but she’s careless with her
money. So the grandfather, rather than giving her the money outright,
puts the money in trust that is overseen by a trustee, who could apply
the money to his granddaughter’s needs specified by the grandfather
in the trust agreement.
Another common use of trusts is planning for grandchildren. Let’s
say you have grandchildren and you don’t know how old your grandchildren
will be when you pass; you may include a provision in your living trust
that says you want some of the money from the living trust to set up a
new trust for your grandchildren when you pass away, which will stay there
for the benefit of the grandchildren until they reach a certain age.
You can have maximum flexibility in specifying the terms of a trust for
grandchildren. You can state what the money in the trust can be used for
and at what age your grandchildren get the money outright.
There is really an incredible amount of flexibility with a trust. Sometimes
people want to use a trust to give money to charity and you can do that;
in fact, you can give money to any sort of person or entity you want,
and control the manner in which the money is. Charitable remainder trusts
are interesting, because you set that up and fund it while you’re
alive and retain the life interest in these assets, which means you retain
the benefit of those assets while you’re alive and when you pass
away, the remainder will to go to that charity;” hence the name.
For more information on
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