Q: What's a Living Trust?
A living trust is a separate legal institution,
completely privatized, and out of the control of federal
and state government entities. It involves two individuals
- the Grantor (alternately known as the Trustor) and
the Trustee. The Grantor places any number of things
into the trust: stock certificates, savings account
numbers, land, and other physical assets, simply by
changing the title of the assets to the name of the
While it may be a worry that you might lose control of your assets,
you needn't fret: a well-built trust will allow you complete control
over your assets until such time as you wish to give your children
or other beneficiaries an inheritance.
At the same time, the Trustee takes care of the trust, keeping
it and nurturing it, so that it persists even after your death.
Whether you are able or institutionalized, functioning or nonfunctioning,
the trust remains in the care of the trustee. He or she carries
out your instructions precisely, making sure that each of your children,
grandchildren, or other beneficiaries receives his or her proper
inheritance. And, too, the trustee can provide care for sick or
injured family members all the while preparing your assets to be
Q: How Is It Different From A Will?
- It has the benefit of a caretaker.
Whether you are physically or mentally sound after the trust's foundation,
the trustee takes care of your estate and your assets until the
specified time of distribution. A living trust is so called because
it is formed and maintained while the grantor is still alive.
- It is completely private.
Unless if it is mentioned in part of a will that enters probate,
a living trust enjoys the benefit of being completely private --
it is not a matter of public record. Nor, indeed, do the contents
of the trust become known until after the time of distribution.
- It does not enter probate.
A trust is usually so well constructed that the precise instructions
given the trustee prevent the necessity of it entering probate.
While it can be contested through a special kind of court process,
it is a separate legal entity and therefore cannot be taken through
the costly and time-consuming rigamarole of court.
- It's very easy to add to and to change.
The grantor can add anything to a trust simply by changing the title
on the property to the name of the trust itself. He or she can also
change the instructions given to the trustee, and, indeed, can make
sure that specific requirements are met by the beneficiary or beneficiaries
before the disbursement of the estate is made.
Q: What Are The Disadvantages?
- Just as expensive to implement as a will
In all actuality, the fees for your lawyer or consultant are probably
going to be just as much as they would be if you were to set up
a will. They may even be more. However, if you are going to be able
to benefit from implementing a trust, odds are you'll be able to
afford that expense in order to secure your estate.
- Usually only for estates of $100,000 or more in value
Estates that are of this value or more are oftentimes subject to
estate taxes in their home state. A trust can help you preserve
your estate for your beneficiaries by keeping it safe from excessive
- No specific tax break, save for estate taxes
Again, the only tax break that you really receive is from the estate
taxes that might be present were you to keep it out of a trust.
You still need to pay your income taxes and the like, which can
be a burden in and of themselves.
Q: Who Can Set Them Up?
- Anyone with an estate of $100,000 or more
If you don't have an estate this size or larger, it really isn't
worth your time to set up a living trust, as the expenses would
likely be too much. However, If you possess a net worth that is
a hundred thousand dollars or more, it is worthwhile indeed. Trusts
can have a value of up to 1.5 million dollars ($1,500,000), and
in some cases you are able to set up an A-B Living Trust system,
which gives you a possible net trust value of three million dollars.
To preserve security for your family, if you have a large estate,
set up a living trust. You certainly won't regret it.