A will is an important part of any estate plan. While a will can name guardians for minor children and bequeath belongings, it’s not comprehensive.
A revocable living trust allows you to keep control of our assets while avoiding probate after death. A living trust attorney can help you decide if a trust should be part of your estate plan.
What Is a Living Trust?
This requests that an executor be appointed.
A living trust is one of the most powerful estate planning options. You retain control of your assets, but the trust allows them to go directly to heirs without probate. A living trust is basically an agreement between a trustee and a grantor. The grantor agrees to transfer assets into the trust, and the trustee holds the assets for the benefit of beneficiaries.
In most cases, you will appoint yourself as the trustee of a living trust during your life. Because you are also the beneficiary while you are alive, you retain control of investing the trust assets. This means a living trust will have no real impact on your life. At your death, the contents of the trust are transferred to your designated heirs by a chosen representative, or successor trustee.
A living trust offers several important benefits.
Living Trusts Avoid Probate
The biggest benefit to a living trust is it bypasses the probate process. Probate refers to the court proceedings to identify and distribute assets according to your wishes or state law. Probate can be confusing, expensive, and time-consuming. If an estate goes through probate, heirs may not receive anything for 6 months or longer.
A living trust will not go through court proceedings. Assets will be distributed to heirs much faster — just weeks rather than months. The successor trustee you name will pay your debts and distribute the assets based on your instructions.
Trustee Can Take Over If Necessary
While not often considered, there is another perk to a living trust. The successor trustee you name can automatically take over if you become incapacitated or ill. If you simply use a will without a durable power of attorney, the court must appoint someone to oversee your finances. This individual will also need to report to the court for property sales, expense approval, and more.
A living trust allows you to choose the person you want to manage your affairs without intervention from the court.
Living Trusts Are Private
Unlike a will, which is made public record when you die, a living trust is kept private. All assets in the trust will be distributed privately. If privacy is a concern, a living trust may be the best solution for you.
A Living Trust May Save Money
In some cases, creating a living trust can save your heirs money. Hiring a trust and estate planning attorney will cost money, and you will need to transfer assets into the trust with paperwork. There may be other procedures involved such as changing the beneficiary on your life insurance and setting up a “pour-over” will.
Despite this upfront cost, a living trust means assets do not go through probate. There will be only court costs to probate your pour-over will, but these costs will be nominal. Your heirs will not be left hiring their own trust and estate attorney to navigate probate.
Transferring your assets into a trust may save your heirs months and thousands in legal fees. There are potential cost savings with a living trust, but this is unlikely for young couples with no children or significant assets.
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What Goes Into a Living Trust?
Your beneficiaries cannot do anything to prevent probate
A living trust can hold many assets and forms of property, but it’s not appropriate for everything. All assets with named beneficiaries like retirement accounts, payable-on-death accounts and life insurance go to heirs without probate anyway. Still, there may be good reasons to add these assets to your trust.
As an example, if a child is named the primary beneficiary of a life insurance policy, guardianship may be required if the child is a minor when you die. If the trust is the beneficiary, you can specify when and how to hold the money until it’s distributed.
Property commonly included in a living trust includes:
- Real estate, even if there is a mortgage
- Valuable collections
- Cash accounts, such as savings accounts and CDs
- Valuable antiques, art, and furniture
- Small business interests
- Precious metals
- Stocks and other security accounts held by a brokerage firm
- Patents or copyrights
- Life insurance proceeds
It’s a good idea to discuss your plans with trust attorneys like Kurt and Blake Johnson before making decisions. Naming a trust as a beneficiary can have unintended consequences. For example, naming the trust as the beneficiary of a retirement account can trigger income tax on the IRA proceeds.
Special Purpose Trusts
benefits to hiring a Las Vegas probate lawyer for estate administration.
A spendthrift trust is usually meant to protect beneficiaries from themselves and creditors. A trustee will have total discretion over asset distribution. This type of trust is designed to benefit someone who cannot control their spending by limiting their access to the principal amount. A trust attorney can help you decide if a spendthrift trust is a good option.
Special Needs Trust
A Special Needs Trust (SNT) is designed to provide for disabled children. This type of trust offers financial support for the child throughout their life without affecting public benefits. An SNT holds assets on behalf of someone with disabilities to supplement money and services. Because these assets are not counted for government programs, there are regulations on how money is disbursed.
There are two types of SNTs. The first is a first-party or self-settled SNT. This trust is created with assets that belong to the beneficiary, usually due to an injury settlement or inheritance. When the beneficiary dies, any remaining funds must be used to reimburse Medicaid. A third party SNT is created with assets from parents, friends, or relatives. Funds remaining in the trust are not used to reimburse Medicaid.
Special needs trusts can be very complicated. A trust attorney can help you set up an SNT and a life care plan that will provide financial support and services for your child.
Irrevocable Life Insurance Trusts (ILITs)
This type of trust is designed to move the proceeds of your life insurance policy outside of your state. The primary purpose of this trust is to avoid or reduce estate taxes. Once the proceeds are outside of the estate, they are no longer included in tax calculations.
There are many forms of trusts available in Nevada. Each type of trust can be customized to serve a purpose in accomplishing your goals. Kurt and Blake Johnson, trust attorneys in Las Vegas, can help you explore your options for preserving your legacy.
Trusts for Minors
Many people wish to leave money to their children or grandchildren in a trust as part of an estate plan. This is done to benefit the child while the are younger for support, education, medical care, and more. This type of trust allows the child to receive money from the trust once they reach an achievement level like graduation or a certain age.
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Do I Need a Trust Attorney to Form a Living Trust?
benefits to hiring a Las Vegas probate lawyers.
As with most legal matters, it’s not necessary to hire an attorney, but it’s recommended. Creating a living trust can be complex and mistakes can destroy the benefits you are trying to achieve. Many people choose to hire an attorney for wills and trusts to not only set up a trust but prepare other estate planning documents.
An experienced will and trust attorney in Las Vegas can help you assess your financial matters and goals to create a comprehensive estate plan. Depending on your goals, a living trust and will may be only part of a plan for your heirs and legacy.
Do I Still Need a Will if I Set up a Living Trust?
benefits to hiring a Las Vegas probate lawyers.
One of the most common questions Nevada residents have about estate planning is whether a will and/or living trust is enough. Wills and living trusts do very different things. Having a will is important to distribute your assets according to your wishes. It also names an executor of your estate and makes provisions for minor children. A living trust, on the other hand, is an instrument for transferring title and assets. A trust can avoid probate, shield assets from creditors, and avoid many tax consequences.
A lawyer for trusts and wills will recommend you have both as part of your estate plan. This is because most trusts only deal with specific assets like property, not the sum of your entire estate. Even if you have most of your assets in a living trust, a “pour-over” will is still important. This document will name a guardian for children and ensure that all assets you intended to put in the trust are put there, even if you do not retitle some before death.
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