We’ve heard it for years – the only sure things in life are death and taxes. Preparing for the end of life is one of those things you know you need to do – but have you actually sat down and done it? Probably not. According to a recent study, only 4 in 10 American adults have a will or living trust set up.
It is important that you don’t fall too far behind. There are some serious problems that can arise if you pass away or become incapacitated without some kind of living trust or will set up, as we will explain below. We highly encourage you to read the information below to understand what a living trust is and why you need one.
What is a Living Trust?
A living trust is a legal document that is similar to a will. Both a living trust and will determine what happens to your assets/property when you pass away, but a living trust has a number of benefits despite costing more to prepare.
Related Article: The Difference Between a Will and a Living Trust
Why Do You Need a Living Trust?
With the living trust in place, the property you own will be distributed according to the trust agreement upon the death of the grantor. This avoids the probate process which divides the property of the deceased in a long and complex manner that the deceased may not have intended.
Related Article: What is the Probate Process if You Die Without A Will or Trust?
Who is Involved in Forming a Living Trust?
The only people who are needed for the trust to be set up are the grantor (you), the person who puts together the trust (usually an attorney), and the trustee (the person who will manage the assets and property during transfer). While there isn’t a state or federal registry of living trusts, people usually store documentation of the living trust in a bank or other secure location and inform their family or loved ones that such a living trust exists.
When Does the Living Trust Go Into Effect?
The grantor (you) can keep using their property in the same way they were using them before the living trust was formed. The day you pass away or become incapacitated, the trustee takes over the management of the property.
Related Article: Family Pressures & Responsibilities When You Are the Trustee to Your Parent’s Trust
Have More Questions?
If you have any additional questions about setting up your living trust or would like Marcia L. Campbell CPA to help you set up your trust, please don’t hesitate to contact us.
Thanks for pointing out that a living trust would be able to ensure that your property would be distributed according to the agreement that the grantor wished after their death. I guess I would be getting one and contact trust services that I can hire to help me. I just need to make sure that my kids will be getting all my properties since I am a single mom. So I have to secure them if ever anything happens to me.
I want to get my estate figured out properly. It makes sense that getting a living trust set up would be beneficial. I’ll be sure to work with a professional for this.
It’s great that you talked about estate planning documents and why you should get a living trust. Recently, my parents said they’re interested in preparing their estate planning paperwork. I believe my parent could benefit from organizing their assets, so I’ll be sure to share your advice with them. Thanks for the tips on living trusts and what people are involved in when making one.