Living Trusts

A Living Trust is an agreement between you (the Settlor or Trustor) and the individual or entity (the Trustee) made during your lifetime. The trust agreement determines how assets placed in the Trust will be managed and distributed. Trusts can be Revocable or Irrevocable. 

A Living Trust can provide various benefits to meet lifetime purposes: 

The trust provides for management of your assets during your lifetime and usually names someone to assume responsibility for them if you become disabled; this can often eliminate the need to go to court to arrange for appointment of a guardian or conservator. 

You determine how your assets will be managed by giving written instructions in the trust. 

You can avoid probate upon your death and save expenses and fees because the trust contains instructions for distribution of your assets after your death without court proceedings. 

Under certain circumstances and with special planning, trusts can be used to help plan for reducing the costs of long-term health care associated with catastrophic illness.

What You Need To Know 

There are different types of trusts for different purposes and not everyone needs a trust. Trusts are not only for the wealthy, however. 

A trust can be established and all of your assets transferred into its ownership immediately or can be established as a Standby Trust, ready to receive assets if the settlor becomes disabled. In such cases, someone needs authority to transfer the assets, usually as agent under special durable power of attorney. 

Irrevocable Life Insurance Trusts can be created to provide substantial estate tax savings for some persons. Such trusts require careful planning. 

Supplemental Benefits Trusts or Luxury Trusts are used to provide a transfer of assets to a person who may receive public benefits. Such a trust can provide funds for items not covered by such benefits without affecting the recipient's eligibility for the various programs available. 

Irrevocable Trusts, of course, cannot be changed or canceled and have special tax treatment. Revocable Trusts are subject to amendment or termination according to the terms of the trust agreement. 

Trusts are governed by state law and should be written so that they meet your specific needs and preferences. 

Where To Go For Help 

Living Trusts are not for everyone, but many people can benefit from the security they provide for management and many people can save money by eliminating the need for probate. 

Deciding whether to create a living trust requires analysis of the extent of your assets, the types of assets you own and your personal preferences concerning their management. Many people prefer to keep personal, unfettered control over their assets for life while others may be willing to have other people manage their resources for them. Sometimes assets located outside your state of residence may require more than one probate on your death; living trusts can eliminate such expense. 

Attorneys, accountants, financial planners and other advisors will often be able too assist in conducting the review of what is best for you. A trust, of course, is only one element of complete estate planning. Trusts, like wills or other legal documents, are best prepared by attorneys. Any document, including a trust, needs to be reviewed regularly to reflect changes in the law or in your family or financial circumstances. 

Naming a trustee requires careful thought. Most people will be trustees of their own living trusts but a successor will have to be named for continuation after the death or disability of the settlor. Family members, friends or financial institutions are often available to serve. Your attorney is able to counsel you regarding this decision.

The Role Of The Elder Law Attorney 

An important benefit of the Living Trust is that it provides an alternative to conservatorship for persons who may have a disability that precludes them from managing their own financial affairs. By careful drafting, a living trust can assure that assets are managed for you by a trustee you have selected and that your preferences as to how they are managed are carefully set out in the trust agreement.