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You've probably seen commercials and
advertisements touting the benefits of Living Trusts. If your estate will be
less than $100,000, then a Living Trust is probably not necessary because your
estate will likely avoid Probate anyway. But if you own real estate, or other
assets worth more than $100,000 in total, then a Living Trust is necessary for
your heirs to avoid the six-month to two-year wait, the publicity, and the
thousands of dollars expended in Probate.
A trust is a written document under which money or other assets are
transferred from one person (the "grantor") to another person or
institution such as a bank (the "trustee"), to be managed and used for
the benefit of a third person (the "beneficiary"). Trusts can be
designed to accomplish a wide range of financial and estate planning goals.
There are two basic types of trusts: the "living trust" and the
"testamentary trust":
Living trusts, also known as "inter vivos" trusts, are created during
the lifetime of the grantor. Testamentary trusts are drafted as part of a
will and take effect after the death of the grantor. By naming a trust as
beneficiary of your life insurance policy, you can exercise greater control over
the distribution and management of the proceeds than by designating an
individual beneficiary. For example, instead of naming your 5-year-old son as
policy beneficiary, which could permit him to access the funds at 18, you could
have a trust drawn up with your sister as trustee which directs her to make
distributions to your son at ages 25, 30, and 35. Trusts can help ensure
equitable treatment of children with different financial needs (one child may
have health problems or need special schooling), and can provide financial
security for an ill spouse unable to manage his or her investments.
A Living Trust is completely revocable ... meaning you can change your mind at
any time. Its function is to hold title to your property while you are the
Trustee and in complete control, and to distribute the property at your death
according to your wishes. It really takes the place of a Will - although we will
be preparing a "pour-over" Will to go along with your Living Trust in
order to make sure everything ends up in the Trust. We will prepare the Advanced
Health Care Directive/Power of Attorney and a Power of Attorney for Financial
Management. Call us for further
information regarding preparation of a Living Trust Document.
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