Considering how you’ll pass down your assets to your family or friends when you pass away can be an unpleasant thought that you want to put off as long as possible. However, the longer you wait, the greater you increase the chances of passing away without any plan in place, which can be a messy disaster for those left behind trying to settle your affairs. You may be thinking about how you want to handle your estate and assets. A living trust comes to mind, but you aren’t sure what it entails. Here are the tops questions to have answers to about creating your living trust.
What Is a Living Trust?
A living trust is simply a document you create to manage all your assets and your estate. You create it when you are still alive so that you are the main manager until you become incapable of doing so.
What’s included in a Living Trust?
You’ll want to make sure that the following are included in your living trust so that all your bases are covered when you pass away.
- Grantor: the person who creates the living trust, yourself
- Trustee: the person in charge of your assets; this can be yourself initially when you are still capable of being in charge
- Secondary Trustee: this is the person you want to handle your assets and estate once you are incapacitated or have passed away
- Beneficiaries: the people you plan to have your assets passed down to once you have died
Does a Living Trust Avoid Estate Taxes?
A huge advantage of a living trust is the avoidance of estate taxes. It also avoids any inheritance taxes that may be incurred when assets are transferred in a will. You may, however, still have to pay gift taxes since those are on a federal level.
What Are Other Benefits?
As well as avoided those taxes, you also avoid the entire probate process. Probate is a legal process that determines whether the will is legitimate, who the beneficiaries are and other legal matters required to pass on assets in a will. It can be very costly, and a living trust excludes it altogether. A living trust also puts the power in your hands, as you can manage it when you are still alive.
Do You Need a Lawyer to Create a Living Trust?
So long as you have the right things in place on the trust, you may not need a lawyer. However, laws on living trusts vary from state to state, and you may want aid from a Sacramento living trust lawyer to make sure you have all the proper documents in place. The last thing you want is your loved ones dealing with a confusing or muddled trust after you are gone.
Thanks to Yee Law Group for their insight into estate planning and common questions about trusts.