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 trust.

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 passed on.

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 taxes.

- 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.


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