What Is A Living Trust?A living trust is something that many consumers consider during their lifetime. However, it is really necessary? Will the world stop spinning if you do not have a living trust? Do you need a living trust and a will? These are all very valid questions that most people have when considering whether or not they need a living trust. One point to consider, you do not need a living trust because your cousin or best friend has one. Whether you need one or not will be determined based upon your individual situation and needs. A living trust is similar in several ways to a will. It handles effectively who is allowed to manage your affairs for specific pieces of property, whether real, or financial accounts. It also handles how those accounts or pieces of property are managed. Typically, a good rule of thumb for living trusts is you should consider one if you either have an estate valued at over $100,000 or you have a large amount of real property of some sort. While the guidelines of who should have a living trust are very flexible, they are a good starting point to consider. Not everyone who fits into the guidelines decides they need a living trust however, and this is also perfectly acceptable. One of the biggest differences between a living trust and a will is that a will determines how your estate will be handled after your death, while a living trust only handles those assets that are transferred to the trust. When setting up a living trust there are three very important people. The first is the Trustor; this is the person who creates the trust and transfers property, and assets to the trust. If you have a lawyer create your living trust, this should be your lawyer. The next important pein the trust should be the trustee. The trustee is who is responsible for receiving the items transferred to the living trust, and managing the affairs as specified in the details therein. It is very important to note that a trustee is not allowed to do as they please with the property transferred to a living trust. They must manage all property in the exact manner set forth in the living trust. Most states have strict laws in regards to the behavior of someone who is a trustee, especially in regards to how the living trust is managed. The other person involved specifically in the living trust is the beneficiary. The beneficiary is the person whom the living trust is set up to benefit. They are the person who is designated to receive all of the proceeds of the trust. A living trust can be used instead of a will, however because it only handles specific property that is transferred, and a specific beneficiary there are very good reasons to have a will as well. However, the fees associated with drawing up your will is greatly reduced when a living trust is present, this is due to the reduction of assets and property that must be listed in the will. It is always a good idea to consult a lawyer who specializes in estate planning such as living trusts to ensure that everything is handled properly. If there is a problem with the setup of the trust, you want to ensure you have recourse against the lawyer who caused the problems. If you are unsure of whom to use, ask for references from friends, family, neighbors, even your local bar association is a good source of referrals. |