| As you get older you will make decisions that can benefit your heirs when you bequeath real property to them. In previous articles we reviewed the importance of having a will. Not only is a will very important to protect your heirs but a personal or living trust can help ensure that your heirs are protected.
A trust enables a person (“grantor”) to transfer ownership of property into a trust that is managed by a trustee for the benefit of the grantor. Trusts allow a trustee to manage property in the event of the grantor’s later incapacity or death. Today there is a also a lot of discussion about living trusts (also known as a "revocable trust" or "inter vivos trust") amongst legal professionals as a solution for a wide variety of problems associated with estate planning through wills.
Let’s begin with a review of Estate Planning in order to better understand trusts.
Estate Planning
Estate planning is a process by which you work with professional advisors who are familiar with your goals and concerns, your assets and how they are owned, and your family structure. It can involve the services of a variety of professionals, including your lawyer, accountant, financial planner, life insurance advisor, banker and broker.
Estate planning covers the transfer of property at death as well as a variety of other personal matters and may or may not involve tax planning. The core document most often associated with this process is your will but trusts can play a valuable role in your estate planning. Estate is very important regardless of your assets.
"Death and Taxes" Video
Please Note: Making this link available on this page does not constitute an endorsement of the foundation or the site or ACTEC by Cambridge Health. The video is meant to provide a public overview of taxes and estate planning by professionals considered expert in the field.
Revocable Trusts
Much has been written recently regarding the use of "living trusts" (also known as a "revocable trust" or "inter vivos trust") as a solution for a wide variety of problems associated with estate planning through wills. Some attorneys regularly recommend the use of such trusts, while others believe that their value has been somewhat overstated. The choice of a living trust should be made after consideration of a number of factors.
This brief summary is provided by the American Bar Association and is intended to provide a framework of basic knowledge regarding "living trusts" in general, in order that you might determine whether you should pursue a discussion of this technique further with your attorney licensed to practice in the state where your estate would be administered.
The term "living trust" is generally used to describe a trust (a) which you can create during your lifetime, and (b) which you can revoke or amend whenever you wish to do so. You can also create an "irrevocable" living trust, but that is permanent and unchangeable and is almost exclusively done to produce certain tax results beyond the scope of this summary.
A "living trust" is legally in existence during your life, has a trustee who is currently serving, and owns property which (generally) you have transferred to it during your life. While you are living, the trustee (who may be you) is generally responsible for managing the property as you direct for your benefit. Upon your death, the trustee is generally directed to either distribute the trust property to your beneficiaries, or to continue to hold it and manage it for the benefit of your beneficiaries. Like a will, a living trust can provide for the distribution of property upon your death. Unlike a will, it can also (a) provide you with a vehicle for managing your property during your life, and (b) authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose.
If you think a trust might be a solution for you, contact your attorney or Simply Call Cambridge Health and our care managers can put you in contact with experts in the estate planning field.
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