Living trusts are a convenient, and even cheaper, alternative to wills for devising property. (See also, my page on Wills) Many people do not realize the time and expense that a probate court action may take before loved ones can receive property from their estate as dictated in their will. In addition, the executor you name in your will may have to incur the costs of retaining an attorney to guide them through probate, where some attorneys command a notable percentage of the estates as their payment. Probate is also public record, which some family members may which to avoid for privacy reasons. For these and other reasons, you may want to consider a living trust instead of a will and an attorney can ensure your documents are drafted properly to effect your desires and objectives.
What is a living trust?
A living trust is an agreement that creates an entity into which you can transfer income and property, whether real estate or personal property, to be held and distributed according to the agreement. A “trustee” is the person or persons in charge of managing the trust property. Since property is retitled in the trust’s name, the trustee simply has to transfer title to the designated beneficiary at the designated time in the agreement, thereby avoiding having to go through probate to transfer the property. With a living trust, no court process or approval is required. Thus, a living trust provides a simpler and quicker process for transferring property than through a will.
Will I retain control over my property?
As the Settlor, the person creating the trust, you can retain control over the trust and your trust property. A living trust allows you to still use and access property in the trust during your lifetime, and you are free to reclaim title of the property if you want. You are able to serve as the trustee of the trust during your lifetime, thereby retaining control over how the property is maintained and held. You are free to revoke or to amend your living trust at any point during your life. The trust only becomes irrevocable after your death. Thus, you are not permanently committing yourself to the trust arrangement after you create it.
Will a living trust protect my assets against creditors?
Unlike an irrevocable trust, a living trust does not offer asset protection. Where you are able to freely revoke the trust and regain ownership of the property within, the law gives creditors the ability to touch the trust property as well. (Compare and see my page on the Nevada Asset Protection Trust, which can shield trust property from creditors.) Unless you have a particularly large estate or are in a profession that may risk personal liability, or simply want to ensure your assets are protected, a living trust may be sufficient for your needs if your main concern is ensuring your property passes easily after your death without the need for court action.