Living Trusts

The most common type of trust is a living trust.    All of a person’s property which would be subject to probate, such as real estate, should be transferred to the trust for it to be effective.  A living trust should be used in conjunction with a pour over will.

Avoiding Guardianship for Adults

One of the major advantages of a living trust is that it can be used to manage an individual’s assets in the event of his or her incapacity or disability.  A revocable living trust has advantages over a power of attorney for property for the purpose of avoiding guardianship.  A revocable living trust normally names the individual creating the trust as the trustee; successor trustees are named to act in the event of the initial trustee’s incapacity or death.   At this time a trust fund is created and the trustee will either invest or distribute the assets in the trust.

You can also name one or more trustees (co-trustees) to act at the same time.  A successor trustee has title to an individual’s assets in the event of the original trustee’s disability so there is no question regarding the trustee’s authority to act.  However, a power of attorney for property should also be included so that assets that have not been transferred to the trust can be utilized.

Avoiding Probate / Keeping Information Private

A revocable trust can also be used to avoid probate and ensure that the assets transferred into the trust are kept private.  If there is no will or only a simple will, probate will be required for any estate that owns real estate and/or is worth over $100,000.  All assets that pass through probate can be accessed by the general public.

Minor Children.

If an individual is leaving assets to a minor child, a trust is extremely important.  If an individual dies with only a simple will or no will at all and assets go to minor as a beneficiary, a guardian for the minor’s estate will be appointed by the court.  The person appointed to be the child’s guardian may be a family member, a friend, or a complete stranger.  The guardian will be responsible for the management of the assets until the minor becomes an adult.  However, upon becoming an adult the individual would receive an outright distribution of all assets.  A living trust can be used to appoint a trustee to manage the funds, avoid guardianship for a minor’s estate and control the distribution of assets.

It is common for an individual to leave assets to a beneficiary upon designated ages.  For example, a beneficiary could receive fifty percent of the estate when he or she turns twenty-five and receive the remainder of the estate when he or she becomes forty.  The trustee can also be given the authority to use the funds to pay for a beneficiary’s education, medical requirements or any of the beneficiary’s needs.