If you own assets (ie a home or business) valued over $100,000 and pass on, even with a valid will, your estate will be subject to a court administered probate process. This process that simply validates your will and retitles your assets to your heirs will cost your heirs tens of thousands of dollars and will take 12-24 months to resolve itself. If you have minor children, the cost to probate your estate will mount until they all turn 18. A Living Trust is the simplest way for most people to ensure that their heirs can avoid probating their estate. This is a summary of the reasons why people need to create a living trust.
- Avoid Probate: Unlike a Will, A Living Trust will allow the transfer of assets such as real estate and business interests to your heirs without the need for probate. This will save your heirs thousands of dollars in attorneys, executor and probate fees and the process can be finished in weeks instead of years.
- Inheritance Protection: Your Living Trust can provide for the creation of spendthrift or other types of trusts which can be used to promote your values to your heirs or to protect their inheritance from creditors, judgments or divorces.
- Provide for Incapacity: Your appointed successor trustee can manage your assets if you become incapacitated.
A Living Trust in its most basic terms is a legal entity that springs to life in the event you become incapacitated or pass on. A Living Trust is a revocable (“grantor”) trust that during your lifetime can be modified at will or be completely revoked. The creators of the trust are typically the primary trustees of the trust during their lifetime. You will appoint a sucessor trustee to takeover if you and your spouse become incapacitated or pass on. The sucessor trustee is typically an adult beneficiary of your trust or the guardian you appoint in your will to look after your minor children. Any property owned in the name of the trust will be treated by all parties (including the IRS and any creditors) as if you own the property in your own name. Thus you can use, encumber or sell any property owned by the trust so long as you are alive. There are no ongoing fees to maintain the trust and the trust does not have to file any special tax returns.
In the event you become incapacitated, the Living Trust will accomplish the following
- The trust will authorize your spouse or the sucessor trustee to act on your behalf with regards to managing your share of the assets owned by the trust. If you have minor children, the sucessor trustee will manage the assets for their benefit until the become of age.
In the event you pass on, the Living Trust will accomplish the following
- The surviving spouse or sucessor trustee will be able to oversee the transfer of your share of the Living Trust assets per your wishes, to your heirs, without needing to go through the court administered process of probate.
- To transfer assets from your estate to your heirs or another trust, the trustee will take a copy of the trust document with a death certificate to the appropriate institutions to initiate the transfer. Unlike probate, a reasonable competent person can finish the process in weeks instead of year.
- Your trust can provide for the creation of new trusts such as credit shelter trusts, bypass trusts, and special needs trusts.
If you would like to schedule a FREE consultation, please feel free to contact Brian Chew by phone or email anytime. Appointments are available during the day, nights and on weekends.