Living Trust
Living Trust Agreement
Getting Started With The Proper Living Trust Agreement
Living trust agreements should be properly drafted and executed, to ensure that the living trust will work according to the primary purpose for which it was intended for in the first place. As long as the living trust agreement is made correctly and properly, it will serve to be a practical estate planning tool, but an improperly crafted one can surely be disastrous and may end up causing one to lose everything.
A living trust is similar to a will, only that it is applied and benefits a person while he is still alive and may be able to cancel it anytime he so wishes. Over the last twenty years, living trusts have become a popular estate planning tool, which is now not just available for the rich, but are commonly being used to ensure protection of one's estate, including assets and properties.
One of the main reasons why many resort to living trust agreements is that a living trust does not go through the process of probate, as does a will. A living trust also assures privacy since courts generally do not have control over living trust agreements, which do not have to go through a lengthy process of asset inventory or appraisal, however, is not free from disputes against creditors or the complexities of claims resulting from a divorce.
Simply put, living trust agreements - through the grantor (the person who initiated the living trust) - only distributes assets and properties to designated heirs, provided that those assets are actually declared and duly represented in the living trust. Once the living trust agreements are legally established, anything tangible can be covered by the living trust, whether it be real estate entitlements or assets, stocks, life insurance, bonds, personal items, heirlooms, jewelry, etc.
The living trust agreement is basically controlled by a Trustee, or the one designated to manage over the living trust. The trustee can be the person who created the trust agreement himself (the grantor) or somebody he designates to manage over the trust. This is one major advantage of living trust agreements. Since the trust is managed only by one individual (the trustee), the trustee is duty-bound to carry out the desires and intentions of the grantor.
For example, if the grantor wants his children from a previous marriage to receive an inheritance, the trustee may have explicit instructions stated in the living trust to make sure that the heirs receive what the grantor wishes. If the grantor, on the other hand, is permanently incapacitated or unable to manage the estate stated in the living trust, the trust may continue to function and distribute the estate whenever necessary, since the trustee is invoked with a fiduciary responsibility to ensure that the requests of the grantor is fulfilled.
Although living trust agreements generally are not subject to probate, they are definitely not exempt from taxes, since income that is earned by a trust during its validity is still taxable income. And since living trust property is still considered part of an estate, it is still subject to estate taxes, although it may be entitled to some tax savings or exemptions depending on state regulations.
Your hard earned assets and properties are indeed valuable and it is but a given fact that somehow you would like to take control over what happens to your estate in the event of your death; and living trust agreements and wills may give you sound planning tools that could help minimize the possible hassles and headaches for you and your loved ones. It pays to be prepared.