| A living trust has many advantages over a simple will | | | | - One rule is that the settlor (the creator of the trust) |
| or testamentary trust (trust after death). The first | | | | cannot be the sole beneficiary of the trust. This means |
| advantage is that it keeps the IRS even further out of | | | | that you can't create a trust by placing assets into the |
| the process than does either a will or trust that | | | | care of another person or group solely for your own |
| becomes effective after death. The second is that, | | | | benefit, but it is okay if you benefit too. |
| unlike a testamentary trust, a living trust is not | | | | So, unlike a will, you can use a trust to create income |
| continually supervised by the court. And finally, a living | | | | for yourself before you die and build your |
| trust is far less likely to be challenged, because | | | | would-be-heirs into the trust as well. The only real |
| creating a trust while you are alive makes contests | | | | problem this creates is that the other beneficiaries |
| over what you intended easy to resolve (you are still | | | | (your heirs) may have rights to the trust before you |
| there to make your wishes known). It is less likely that | | | | have passed. However, the instrument is flexible |
| a relative will come forward and say that they think | | | | enough to allow for a great deal of control over this |
| you are insane or incompetent, while you are still | | | | aspect of the trust, such that if you wish to create a |
| around to challenge the assertion. As instruments go, | | | | trust whose other beneficiaries' rights grow greater |
| the living trust has a great deal to offer. | | | | upon your passing, that is easy to do. This definitely |
| The only downside of the living trust may be that your | | | | makes a trust something to explore with your lawyer |
| would-be-heirs (provided you had a will) know what | | | | when you do your estate planning. |
| you are giving them. Those who are being extra nice | | | | For example: The creation of a trust begins when you |
| just in case they might get something, and for that | | | | put your assets into the care of a third party, like a |
| reason alone, may stop visiting as often, although that | | | | bank or an estate planning attorney or a trusted |
| may be a blessing in disguise. That is the great thing | | | | relative or friend. Your attorney may be able to |
| about a will -- people only know what you think of | | | | structure the trust so that you get the vast majority of |
| them after you're beyond hearing complaints and | | | | the benefit and allocate a very small portion of the |
| insults. However, trusts are by most accounts still | | | | benefits to the other beneficiaries. Your attorney |
| vastly superior. | | | | should be able to design the trust so that, upon your |
| Elements of a trust: | | | | passing, your share of the benefits goes to the other |
| - A trust is easy to form and it is a trust's minimal | | | | beneficiaries in the amounts you see fit. |
| requirement that makes it such a flexible instrument for | | | | By bringing your beneficiaries into the trust before your |
| asset transfer. | | | | passing you will have greater control over their ability |
| - A trust is created when the settlor (a term denoting | | | | to contest what happens after you are gone. You will |
| the creator of the trust) places property into the care | | | | also insulate your assets from taxation schemes that |
| of another person or group (called the trustee) for the | | | | affect wills, but do not have any effect on trusts. In |
| benefit of a third party beneficiary. | | | | most cases the trust is by far the better option for |
| - The property used to create the trust is traditionally | | | | estate planning and you should seriously consider |
| used to generate income for the beneficiary. | | | | asking your attorney to explain it as an option. |