Living Trust
Creating A Living Trust
Creating A Living Trust - Trust Among The Living And The Dead
Creating a living trust begins once an individual frequently called the trustor assigns the property to another individual called the trustee for the good of still another individual called the beneficiary. Although no law or rule exactly delineates the meaning of living trust, such arrangement fundamentally means a trust that can be modified by the trustor while he is still alive. On the basis of the living trust, the trustor vests all the good that can be gained in a certain property into the trust until his demise.
The trustor can also appoint himself as the trustee, but more often than not, the trustor's wife or a corporation act as the trustee. You can provide your living trust with real or personal property. Some living trusts are provided with property only later on upon the demise of the trustor. A lawyer can assist you as to the proper time when you will put properties into your trust. The conditions of the terms of a trust are embodied in a legal document called the declaration of trust contract or agreement. Creating a living trust means that the trustor and the trustee execute such legal document.
Perhaps your desire in creating a living trust is to attain one or more objectives. It could be that you want to provide your living trust with your properties in order to prevent the probate of your estate. If you, in your capacity as the trustor, register your properties as belonging to the trustee, those properties are not subject to probate proceedings or within the authority of any probate court to handle. It could be also that you desire to have your properties administered for the best interest of your family upon your demise.
Finally, it could also be that you are creating a living trust in order to mitigate your tax liabilities.
What is the definition of a probate?
Upon the demise of a person who has properties covered by the probate, a legal procedure starts (1) to identify the last will of the testator, if there be one; (2) to know the kind and extent of properties involved; (3) to know the creditors of the testator or decedent; and (4) to know the most equitable manner by which the properties shall be distributed among the heirs after the settlement of the liabilities of the estate have been accomplished.
Is there any other way my properties will not be subject to probate aside from creating a living trust? Yes, there are other methods by which you can avoid the probate of your estate. For instance, if you own properties together with somebody else who have rights as survivor, then the ownership of those properties will be transferred by operation of law to the survivors upon your demise, without undergoing probate.
Other arrangements such as contract of life insurance and pre-need plans make the proceeds thereof not subject to probate. It would be best if you tell your lawyer first of your plan to avoid probate before entering in the aforementioned legal arrangements.
In terms of lesser tax liabilities, which is better, creating a living trust or a will? Estate taxes do not depend on the fact that ownership of the properties are transferred from one individual another. The truth is, estate tax liabilities depend on the valuation of the subject properties. Legally speaking, even if one manages to successfully avoid probate proceedings, estate tax still remains to be paid. But you can increase, decrease, or delay the tax liabilities.