3 Common Questions About Revocable Living Trusts
Although a simple will can be part of an estate plan, the use of revocable living trusts has increased significantly in recent years according to AARP. Although you might consider a living trust because of the savings in money and expense of the probate process, this estate planning tool can provide many other advantages over a will. Because our New Jersey estate planning attorneys recognize the value of this estate planning device, we have provided answers to common questions about revocable living trusts.
What is a living trust?
A revocable living trust is a legal relationship created between three parties: (1) the creator who sets up the trust; (2) the trustee that manages the trust property and distributes the proceeds to the beneficiaries; and (3) the beneficiaries who receive the trust property when the trust term expires. A living trust allows you to place assets in the trust where they and the income generated by the assets are managed and distributed by the trustee. The trust income and property must be distributed according to the terms of the trust. Because the trust is created during the life of the person who creates the trust, it is referred to as a living trust.
How can you benefit from the creation of a living trust?
A living trust provides multiple benefits to the creator of this estate planning arrangement. The person you choose as the “trustee” can manage the trust assets and obligations if you become incapacitated. The trust also can provide for the financial needs of your family members in this situation. After a person passes away, the trust provides a means for assets to be transferred without the probate process and through a structured process in stages. Depending on the facts and circumstances, our experienced New Jersey estate planning attorneys also might be able to structure the trust to minimize federal or state consequences. The creators of a revocable living trust also have the flexibility to act as the trustee often with their spouse or to revoke or modify the trust before death.
What does a living trust compare to simple will?
While both estate planning tools provide a method to pass your financial legacy to your loved ones, a living trust often provides several advantages. While a will must go through the probate process, a living trust does not need to be administered by the probate court. The benefits of avoiding probate often include less cost and faster distribution of your legacy to your surviving loved ones. Because court documents and orders associated with the probate process are a matter of public record, a living trust protects the privacy of your financial affairs and other information about your family because it is handled outside probate.
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