Wise Money: A primer on Living Trusts

By Kevin Theissen
Skygate Financial Group LLC
©2017-Telegraph Publishing LLC

Aliving trust is a popular consideration in many estate strategy conversations, but its appropriateness will depend upon your individual needs and objectives.

A living trust is created while you are alive and funded with the assets you choose to transfer into it. The trustee (typically you) has full power to manage these assets. A living trust will also designate a beneficiary, or beneficiaries, much like a will, to whom the assets are structured to automatically pass upon your death.

If you create a revocable living trust, you may change the terms of the trust, the trustee and the beneficiaries at any time. You can also terminate the trust altogether.

Why create a living trust?

The living trust offers a number of potential benefits, including:

  • Avoid Probate — Assets are designed to transfer outside the probate process, providing a seamless and private transfer of assets.
  • Manage Your Affairs — A living trust can be a mechanism for caring for you and your property in the event of your physical or mental disability, provided you have adequately funded it and named a trustworthy trustee or alternative trustee.
  • Ease and Simplicity — It is a simple matter for a qualified lawyer to create a living trust tailored to your specific objectives. Should circumstances change, it is also a straightforward task to change the trust’s provisions.
  • Avoid Will Contests — Assets passing via a living trust may be less susceptible to the sort of challenge you might see with a will transfer.

The drawbacks of a living trust

Living trusts are not an estate panacea. They won’t accomplish some potentially important objectives, including:

  • A living trust is not designed to protect assets from creditors. It is also considered a “countable resource” when determining your Medicaid eligibility.
  • There is a cost associated with setting up a revocable living trust.
  • Not all assets are easily transferred to a living trust. For example, if you transfer ownership of a car, you may have difficulty obtaining insurance, since you are no longer the owner.
  • A living trust is not a mechanism to save on taxes, now or at your death.
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Filed Under: Business & Personal FinanceWise Money

About the Author: Kevin M. Theissen, principal and financial advisor at Skygate Financial Group LLC, has more than 20 years of experience as an investment advisor, wealth manager and tax professional.

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