Needham Trusts Attorney
Simply put, living trusts are an expedient way to transfer property at your death. A living trust is a legal document that controls the transfer of property in the trust when you die.
If you need assistance with your living trust, contact a Needham trusts attorney today!
Generally, living trusts are established during an individual’s lifetime and can be modified or changed while that person is still alive. Circumstances do change and the option to make alterations in the trust is important.
For this reason, a living trust is set up on a “revocable” basis. Revocable means you can modify or change the trust’s provisions. Your other option would be to create an irrevocable trust. Once put in place, you are unable to change the terms of the trust regardless of the circumstances.
What is the Benefit of Having Living Trusts?
As you will see, living trusts speed up the process by which your property moves to your designated beneficiaries after you die. Today, and into the foreseeable future, this is vitally important as the United States is experiencing an unprecedented wealth transfer.
It is estimated, according to Fortune magazine, that some $6.8 trillion worth of assets will soon pass from parents to children, grandchildren, friends, charities, and others. The questions remains: how will this wealth be transferred? Will it be the traditional methods of wills and probate or the new revolution of estate planning that has incorporated living trusts? Many legal experts believe that living trusts are the future of wealth transfers.
The concept of living trusts has created controversy simply because the legal profession seems evenly split on the issue. Estate planners seem to favor living trusts but there are enough opposed to the concept to avoid a clear majority decision.
Living trusts are also called “inter vivos” trusts, a Latin term preferred by attorneys. The Internal Revenue Service calls them “grantor” trusts. They all mean the same thing.
The Internal Revenue Service, however, recognizes the living trust as a valid estate planning tool and exhibits no prejudice against it. There are specific provisions in the tax laws that deal with living or grantor trusts.
The revocable provision means that while you live, you still effectively own all of the property that has been transferred into the trust. You can sell it, spend it, give it away; in short, do anything you wish since the property is still yours. The trust itself is merely a document in your lifetime that truly doesn’t begin to function until you die. Then, the trust operates to transfer your property privately, outside of the reach of probate, to the specific individuals or organizations to whom you wish to leave your worldly possessions.
What is Probate?
What is probate? Why do people try to avoid it? Technically speaking, probate is the process by which one proves the validity of a will in court. If there is no one contesting the will, this should not take long. If there are complications, probate can take years. For those of you familiar with the works of Charles Dickens, recall Bleak House and the never-ending probate case of Jarndyce vs. Jarndyce.
Probate has come to mean not just proving the validity of the will but the entire administrative sequence involving the passing of an owner’s title to property after the owner’s death. The deceased’s property is inventoried, and creditors are identified and paid after the payment is made to the estate’s attorney, executor, and tax entities.
The term “probate” also identifies the court which has jurisdiction over the estate probate and administration. Probate court also has jurisdiction over the guardianship of minors and mentally incompetent adults. All wills go through probate.
The average length of the probate process is twelve to eighteen months. Any estate transactions in that time must be approved by the probate court.
This can create havoc for beneficiaries. Since a living trust replaces a will and doesn’t need validation from the probate court, considerable time and hassle can be saved.
This, then, is the purpose of a living trust. The trust is simple to establish and, when carried out, makes it easy to transfer property. The trust is a matter of explicit instructions about who gets what property after the owner dies. Like a will, the trust should cover all expected and unexpected events that might occur. The details tell the designated trustee how to use the money and property in the trust.
A living trust is a capable substitute for a will and a document that more and more people, disillusioned with the probate system, are turning to in their estate planning.