Not too long ago, I was asked a question about a living trust. I will be honest with you, I did not feel qualified to answer this question. In fact, I did not know the first thing about a living trust!
I realized that I was not the only one who did not know about them. So, instead of getting discouraged, I decided to take the time and learn as much as I possibly could about the subject.
I knew that if I did not know what a living trust was, there were others out there that were in the same situation.
After a lot of extensive research, here is information about a living trust!
What is a Living Trust?
A living trust is essentially just a formal contract with yourself. It states that while you are alive, and can still manage your assets, everything is the same as before. However, if something happens to you and you become disabled, or dead, and no longer able to manage your assets, you have a planned person, or people, to manage them for you.
There are 3 important terms for you to know!
1. Grantor (Trustor, or Settlor)
All assets are re-titled to the trust.
Makes important decisions such as:
What happens now?
What happens when I am disabled?
What happens upon death?
All powers that Grantor has over assets, trustee has in assets within the trust.
Manages assets in trust for the benefit of the beneficiary.
Uses and Enjoys Assets.
The Grantor can be the Trustee while alive and not disabled. Someone else may become the Trustee if the Grantor releases control and/or becomes disabled. Both, though not at the same time unless they are the same person, are able to be the beneficiary and manage the assets in the trust for their own benefit.
Of course, all of this can be done without a living trust, however, this sets these actions up formally.
One of the big questions asked about a living trust is, "How are taxes filed?" Taxes will still be filed the same way. Also, the property tax base will remain the same as well.
These things are not necessarily specific to only a living trust. There are a few elements that are unique to a living trust.
If something happens to the beneficiary(ies), a successor trustee assumes legal ability to manage all bank accounts and assets in the trust. Also, a successor trustee can manage while the beneficiary(ies) are alive, but must be done for the beneficiary's benefit and best interest.
This is a living trust in a nutshell.
It is not truly complicated. However, it will take some thought as to who you would like to trust to best manage your assets and who would like to receive the benefits when/if something happens to you that prevents you from managing and enjoying them yourself.
If you would like further information, please view this video.
If you still have any questions, please feel free to contact a local professional or contact us and we would be more than happy to answer your questions.