A trust is a contract between the Grantor (the person who creates the trust), the Trustee (one who controls the trust) and the Beneficiaries (those entitled to benefit from the trust). The Grantor decides how the trust will be operated by the Trustee and who benefits, how and when. You can create a trust that permits you to be Trustee and give yourself the right to receive full benefits from it. This type of trust is called a Revocable Living Trust or Living Trust. You can keep total control and access to all your assets during your lifetime, and say how your assets are to be distributed at your death.
- A living trust offers the Grantor maximum control over assets.
- A living trust can provide for asset management during illness or incapacity, which normally avoids the necessity of conservatorship proceedings.
- A living trust continues to function as planned when the Grantor dies, with no probate process needed. This may save time and expense, and is helpful when the Grantors own property in more than one state.
- A living trust can provide asset management and protection for children who are not proficient with handling money.
- A living trust can protect assets from a spouse’s subsequent remarriage after your death.
- A living trust keeps your affairs private.
- A living trust can provide for proper management of your business in your absence.
- There are any number of different types of trusts. Without knowing your values, needs, and desires, it is impossible to know what kind of trust will best serve you.
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Some traps to avoid…
- While a Revocable Living Trust has many advantages, it does not protect your assets from a nursing home, lawsuits, divorce bankruptcy or other creditors.
- Unless a Living Trust is appropriately funded, it may not accomplish your goals.
- Beneficiary designations on a stock account or IRA may override your Living Trust.
- The assets in a Living Trust are counted as resources when applying for Medicaid.
- Very few revocable living trusts provide all the benefits listed above. A qualified estate planning attorney like those at Front Range Estate Planning knows how to incorporate these protections into your plan.
If you want to learn about some of these benefits,