Living Trust
Estate Planning Living Trust
Estate Planning And Living Trust
Ensuring that your properties are correctly administered after your death is a difficult task. Nevertheless, you could do this by estate planning, living trust being one of the best. Through a living trust, you are relieved from your obligation of making sure that your family and loved ones are not left empty handed. Moreover, a living trust has other positive benefits like economy and privacy.
The Fundamentals - What Is A Trust?
In estate planning, a trust is a legal arrangement by which the ownership of properties are vested from the maker of the trust known as the trustor to another individual called the trustee - all for the benefit of third persons called the beneficiaries. When the trustee gives his consent to work for the trust in such capacity, then he is duty bound to manage the properties in accordance with the trustor's instructions.
Basically, these instructions are in writing together with the other terms and conditions of the trust. When the trustor designates another person as the trustee, the document embodying the same is termed as the Trust Contract or Agreement. However, if the trustor himself is the trustee of the trust, it is legally termed as the Declaration of Trust.
What Is A Living Trust?
In estate planning, a living trust is the legal nomenclature for those trusts arrangements that are made during the life of the trustor. There are various kinds of trusts. For instance, a testamentary trust, which is the one to take effect upon a person's demise. A living trust is often times made for the benefit of the trustor himself. Upon his death, the properties covered by the trust are disposed of for the good of the trustor's loved ones and other beneficiaries
Can One Modify A Living Trust?
A living trust may or may not be revoked based on the purpose for which the trust was created. Considering that you experience changes in life, then you can modify or even put an end to your trust. Often times, you can revoke a living trust you created for your own interest. Often times too, this type of trust has provisions for the management of your properties in case you become ill or incapacitated, and this will continue after your demise for the benefit of the beneficiaries. After your demise, the trust, by practice, can no longer be revoked.
As already mentioned, irrevocable trust cannot be altered of modified upon its creation. Compared to a revocable trust, an irrevocable trust may not be subject to taxes for estate. Due to this, it is a common practice to include a life insurance in the irrevocable trust to the extent the insurance indemnity will not be covered by the tax on the estate.
Irrevocable trusts are also utilized for purposes of maintaining control of the properties of individuals who cannot administer the same. One obvious disadvantage of an irrevocable trust is that it is unable to adapt to changes happening in the life of its maker.
Is It Possible For Me To Become A Trustee Of My Own Living Trust?
In estate planning, living trust has a popular variation in which the trustor is also the trustee. You act in your capacity as the trustee of the properties covered by the trust while still living and able. Likewise, in such type of living trust, you also designate another trustee who will succeed you in case you die or become incapacitated.