When a living trust is created, the individual that owns the belongings (the grantor) delivers the ownership of the assets to the trust itself.
Let’s make-believe that you’re the owner of an investment property. When you have a living trust set up, you can take the deed of the property, take your name off it, and replace it with the name of the trust. From that point, you would no longer be the owner anymore, the living trust would be.
You are able to do the same with vehicle titles, papers from financial records, and anything else you desire to place in the trusts name. This procedure is known as “funding the trust”, and the belongings combined create a trust fund.
Then, a “trustee” is designated by the grantor in the trust papers to ensure the guidelines in the trust contract are implemented. The trustee could be a family member or might be an assigned professional trustee, typically from a financial institution.
From the trust fund, the grantor may bequeath a full-inheritance to the heirs (known as beneficiaries). They also have the control to place specific terms that are required to be met prior to beneficiaries receiving things from the inheritance (such as a grandchild graduating college prior to inheriting the car.)
Living Trust Types
Keep reading to find out more about the 2 types of living trusts: revocable trusts and irrevocable trusts.
Revocable trusts are by far the most customary type of living trust. To such an extent that people call it simply “a living trust,” or “a living revocable trust.” As the name suggests, a revocable trust may be modified or revoked (annulled) by the grantor at their discretion. Undertaking this is not a fast job, but it can be accomplished, making it an adaptable option.
An irrevocable trust is active and can’t be modified, not even by the grantor. It takes a judge to decide if a change could be made, and moreover the conditions would have to be substantial. This clearly makes the revocable trust a more favorable alternative. Actually, many people can begin with a revocable trust and then change it to an irrevocable trust afterwards (when they have more certainty.)
Another thing to know about each type of living trust is that when if grantor passes away, the revocable trust systematically converts to an irrevocable one (since the only individual that could have modified it has died.)
Living Trust Benefits
A living trust might have some benefits for you over other ways to handle your estate. Here some of the benefits:
- Time and money saver in the probate process – A living trust designates a trustee that can without delay take care of your end of life matters—such as paying funeral fees and allocating property to your heirs—devoid of having to wait for a probate judge. Less wait time means reduced probate fees and more savings.
- Provides more Protection When challenged – Your living trust is not as likely to be challenged in a court than a straightforward will. It’s more difficult for the challengers, since they are required to substantiate that you were forced into signing the papers and coerced in going through the entire process of funding the trust.
- Protects privacy more – Since a will is public documentation, anyone can obtain a copy of it following your passing from the county records. However, a living trust is entirely private. With a trust, no one will know the specifics unless the trustee shares that information.
Need an Affordable Living Trust Lawyer in Scottsdale?
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