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The Importance of a Living Trust

 

What is a Living Trust?

A living trust is a very important document to have in the case of an unplanned death or if you become very ill and are unable to make important decisions. It is a legal document that holds all of the information and the title to your personal assets and any real estate that you may own. A living trust is somewhat similar to a will by that it explains what to do with your assets and any estate in the event of your death.

A living trust allows you to still keep your assets and real estate during your lifetime. Your any property will not transfer to those that you request until your death. A trust will not be effective unless it has its own title to the property or asset. The process of transferring the title your assets into a trust is called "Funding your trust."

 

Why is it so important to have a living trust?

 

To Protect Assets and Property

The first reason that some may have a living trust is to protect certain assets or properties for beneficiaries. While this is not the most important reason to have a trust, it certainly can protect essential property from getting into the wrong hands. Most commonly assets and property usually go to a spouse, children or other relatives. Although, there are times, when we may feel as if we have family who may not be able to handle such an inheritance. Also, if your children happen to be young during an unplanned sickness or death, it would not be liable to write a check for a large sum of money. Legal documents can be drawn up so that a trust or account can be created with another trusting family member's name. Then your child would only receive so much money until he/she reaches a certain age, as well as only receiving a specified amount of money each month. By having the ability to specifically document where assets and property go, you can have a sound mind to know that everything is being taken care of financially.

 

Being Able to Manage Property While Incapacitated

While most living trusts are usually created for the event of a death, they are also ideal for those times we could possibly become too ill to take care of important financial matters. It is important to draw up a trust when we are healthy and have a clear mind. This can also keep siblings and other family members from having the stress of dealing with important property matters or making the decision of what to do with particular assets.

Some property or assets may have a joint name added such as a son, daughter, spouse or other sibling. While this can help in some instances such as paying bills, it doesn't necessarily still have the power to take care of other financial matters. The next best step is to assign a power of attorney in the living trust. This person will be responsible for handling assets and property. They will have the power to sign all of the important legal documents that are necessary. Alongside a power of attorney, there should also be a revocable living trust. This will allow that specified person to take over should you become ill or incapacitated.

 

Avoid Probate

When there is a will involved, your family will have to go to court and figure out who will get your property. If you have not made any future plans at all, then the state decides who will get your property. Most of the time, your spouse will only get 1/3 of your assets or property. Then the children get 2/3's. Probate can carry out for a long time as well. States declare that it must take at least six months. Although, in most cases, it can take as long as two to three years before a decision is reached. By having a living trust, you can state who you would like to be in charge of your property and assets. It also can state what percentage your spouse, children or other family members will receiving of your assets or property. By having this listed in advance, you can avoid probate and the state from having to make important financial decisions for the members of your family.

 

Privacy

Living trusts are kept private where as living wills are not. Individuals want to protect their assets, property and family name. A will is often not a private process. It often involves meeting with the courts, having the will read aloud with a listing all of the estate and assets and whom they will be rewarded to. A will can often be contested in court too-(although it usually is unsuccessful). Many wills often end up in probate court and anybody can have access to the estate files.

Revocable living trusts are kept private and they do not get filed to probate court. Nobody is allowed to view the trust unless the grantor or trustee allows them to. Privacy can be very important to individuals and families. Most do not want strangers or non-family members getting into their private financial matters. For this reason, a living revocable trust is filed.

 

Conclusion

At one time or another, all of us must make plans for the future. We never know when we may get sick, incapacitated or perhaps even pass on. It is important to take care of our assets and property so that our family isn't left with stressful decisions later on. This also can allow your family to help make the decisions together, so that there won't be any fights or regrets later on. If you find all of these reasons to have a living trust important to you, then perhaps you should contact a lawyer so that you can make sure your loved ones are taken care of when you won't be able to.

 

 
 

 

 

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