FAQ'S
Setting Up a Living Trust - What are the Advantages?
What you need to do to set up a living trust? This is one of the many questions we receive about living trusts. There are advantages of a living trust that are not found in other estate planning documents (e.g. a Last Will and Testament). See the answers to questions about setting up a living trust.
What is a living trust?
Test A trust is an arrangement under which one person (a trustee) holds legal title to property for another person (a beneficiary). You can be the trustee of your own living trust, keeping full control over all property held in trust.
A living trust is simply a trust you create while you're alive, rather than one that is created at your death.
Different kinds of living trusts can help you avoid probate, reduce estate taxes, or set up long-term property management. For more details, see Trust or call Traders Accounting at 800-938-9513.
What are advantages of a living trust?
The main advantage of a living trust is the property left through the trust does not have to go through probate court. The probate process is a minimum of 6 months before the inheritors would see any inheritance - and can easily last up to 2 years. In many cases, about 5%-10% of the estate value will be eaten up by lawyer and court fees.
How does a living trust avoid probate?
The property is transferred into a living trust before your death, thus there is no need to go through probate. The successor trustee (generally a spouse or other person appointed to handle the trust after your death) simply transfers ownership to the beneficiaries you have named in the trust. In many cases, the process takes only a few weeks, and there are no lawyer or court fees to pay, easing the burden on loved ones during a stressful time. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.
Is it a hassle to hold property in a living trust?
Setting up a living trust for you does require some crucial paperwork. For example, if you want to leave your house through the trust, you must sign a new deed, showing that you now own the house as trustee of your living trust. Our experts will walk you through the entire process, making sure all of your I's are dotted and T crossed. There is no need to feel overwhelmed by tedious paperwork, remember our motto, 'You trade, we'll do the rest'!
Is a living trust document ever made public, like a will?
No. A will becomes a matter of public record when it is submitted to a probate court. The terms of a living trust, however, need not be made public. All of your assets and private affaires can stay just that. Private.
Does a living trust protect property from creditors?
No. A creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your own name. Generally, after your death, all property you owned -- including assets held in a living trust -- is subject to any lawful debts.
On the other hand, probate can also offer a kind of protection from creditors. During probate, known creditors must be notified of the death and given a chance to file claims. If they miss the deadline to file, they're out of luck forever.
Can a living trust reduce estate taxes?
A living trust can reduce the federal estate tax bill for people who own a lot of valuable assets.
An A/B trust is one tax-saving living trust designed primarily for married couples. Each spouse leaves property, in trust, to the other for life, and then to the final beneficiaries, often the couple's children or grandchildren. This type of trust can offer substantial savings on estate taxes. If you are interested in learning more about what you need to do to set up a living trust call Traders Accounting at 800-938-9513.
