If the COVID-19 pandemic has you thinking about the importance of estate planning, you are not alone. In a study reported at https://www.caring.com/caregivers/estate-planning/wills-survey#the-importance-of-estate-planning, the results showed that more than 60% of respondents believed that estate planning is important, but unfortunately less than 25% of those that responded actually had a will set up. Perhaps the reason why so many people haven’t followed through on their estate planning goals is a lack of knowledge about the tools and resources that are available. At David Knecht Law, we have extensive experience in estate planning. We can meet with you, understand your objectives, analyze your assets and liabilities, and help you establish a plan that is tailored to you and your family.
This article will help you understand one estate planning tool, which is a living trust. (source: https://www.scscourt.org/self_help/probate/medical/living_trust.shtml)
- What is a Living Trust?
A Living Trust is a legal tool for financial planning that allows a person (Trustee) to hold another person’s (Settlor’s) property for the benefit of someone else (Beneficiary). Unlike a testamentary trust, a Living Trust goes into effect during the settlor’s lifetime.
- Can you keep full control over the property once a trust is set up?
Yes, you can keep full control over the property and have the right to use and spend that property as if it had never been put into trust. In most cases, the settlor, trustee, and beneficiary are the same person (at least until that person dies or becomes incompetent). In other words, if you set up a Living Trust, you can be the settlor, the trustee and the beneficiary of the trust.
- What are some of the potential advantages of a Living Trust?
Some of the advantages of a living trust are:
- You avoid probate – If all your property is in trust wen you die or become incompetent, then legally you don’t own anything in your name, so you can avoid probate, which is the formal court administration of a decedent’s estate.
- Tax planning – a Living Trust may help avoid or reduce estate taxes, gift taxes and income taxes.
- Control – a Living Trust lets you decide what will happen to your property after death.
- Protection Against Beneficiary Creditors – sometimes trusts can protect assets received by the beneficiaries from their creditors
- Privacy – a trust is not a public record, so the general public who is not a beneficiary does not have a right to know about the assets in your trust. However, when you die, all the named beneficiaries and successors at law have a right to a copy of your trust.
If you are interested in more information about how a Living Trust may be a useful tool for your estate planning, please contact the Law Office of David Knecht, at 707-451-4502.
