What is a Living Trust? A living trust is a legal document which people create while alive to make sure that what they own is secured, if they die or if they become incapacitated. Such fund is quite profitable to the successors because of no need to undertake probate proceedings. That is, it is not necessary to show that they are the legal successors in the court.
How Does a Living Trust Work?
The incorporation of a living trust involves the transfer of ownership of assets to the trust. This means that the individual no longer have rights to the property. This is followed by the appointment of a trustee to be responsible for the management of the trust. Individuals who can be a trustee include the individual’s successor, a member of the family, a lawyer or law firm, or any trustworthy individual. People use this legal tool to secure their property and to ensure that the trustee will give out the property based on their intention. It is time to acquire knowledge about different parties in this context.
The grantor is responsible for the establishment of the trust through the transfer of property to it. Such individual is also called the trust maker, grantor, or settlor.
The responsibility of this individual is the handling of every aspect of the trust. The majority of living trusts can be revoked. That is, it is possible for the grantor to change them or terminate them. The grantor could be the trustee in such a situation.
There is a need for the appointment of another individual as a successor trustee in a situation whereby the grantor is the trustee. The role of a successor trustee is the management of the trust if he dies or becomes incapacitated. The successor trustee has the same right as the grantor when anything happens. However, the successor must act only based on the instructions of the grantor. Transferring, selling, or buying of property of the trust based on the grantor’s laid down intentions are possible.
Following the death of the grantor, beneficiaries are the individuals that will take over the assets. Should the grantor be the beneficiary, the individuals that will own the property are known as remainder beneficiaries.
What Are the Benefits of a Living Trust?
There are various benefits attached to the establishment of a living trust.
The first benefit is the possibility of the grantor to maintain the ownership while alive; peradventure he makes himself the trustee. This involves signing a ‘declaration of trust’ to name himself as the trustee.
The second benefit is that it is not necessary that the beneficiaries engage in any lengthy and complex probate process, because property distribution to the beneficiaries is the duty of the successor trustee. Property transfer typically takes a few weeks and it is possible to terminate the trust following this.
The third benefit is that a living trust that is not revocable can bring tax savings for the grantor.