A living trust, also known as an inter vivos trust, is a potentially useful tool for estate planning that many people do not know about. In some cases, it can help to protect your estate from liability, and reduce the risk of problems when you pass away and your family is probating your estate. But what exactly is a living trust, and how can it benefit you?
What is a Living Trust?
In simple terms, a living trust is like other trusts: it is a type of legal arrangement where one person, known as the grantor or trustor, appoints someone else, known as a trustee, to watch over their property on behalf of a named beneficiary. However, a living trust has some special traits compared to other types of trusts, specifically in that the grantor and the beneficiary are generally the same person. In addition, so long as the grantor is alive, the trust is revocable, meaning assets can be freely added to or removed without penalty.
How Does a Living Trust Function in an Estate Plan?
While you are alive, an inter vivos trust effectively just watches over your property, and helps to protect it from taxes and legal liability. When you pass away, however, it converts into an irrevocable testamentary trust, with your heirs as named beneficiaries. When that happens, the property in the trust is distributed by the trustee to your heirs, in accordance with the terms laid out in the trust’s documentation.
How Can a Living Trust Benefit Me?
There are several major benefits to a living trust. First, property held in a trust is exempted from many types of taxes, including estate and gift taxes that your estate might otherwise need to pay when you pass away. Second, it is protected from many types of legal and financial liability, meaning that creditors cannot generally access the assets to satisfy any outstanding debts. Finally, assets held in the trust are considered non-probate, meaning they can skip much of the lengthy probate process and be distributed with relatively little cost or fuss.
Should I Get a Living Trust?
That being said, a living trust is not for everyone. Every person has their own estate planning needs, and it can be difficult to say what works best without taking into consideration your unique circumstances. That is why you should speak to a lawyer with experience handling estate law matters, who can advise you on your best course of action for you and your loved ones.
The estate planning attorneys at David J. Lorber & Associates, PLLC will work with you to handle all of your trust and estate law needs, including assisting in estate law litigation. For comprehensive estate and elder law services in New York, call David J. Lorber & Associates, PLLC at (631) 750-0900 or contact us online to schedule a free consultation at our Setauket office.