Advantages of using the Revocable Living Trust for the person setting it up (the Trustor)
A Revocable Living Trust is a legal document signed by the settlor, and that settlor retains the right to revoke or amend the trust at any time prior to the settlor’s death. More than a nominal part of the settlor’s property is subject to the trust during the life of the settlor.
A “LIVING TRUST” is created and becomes effective during the life of the trustor/settlor. A “WILL” on the other hand becomes effective only after the death of the settlor.
When you die without a living trust, your assets must go through probate. If you have a will instead of a trust, the probate court will take over the process of distributing your assets. During this stage, your assets will be distributed according to probate court order and becomes part of public records (with no privacy involved).
The probate process can drag on and get expensive. If your will is contested, that could cost your family members lots of money in legal fees and costs.
How does a living trust avoid probate?
Property you transfer into a LIVING TRUST before your death doesn’t go through probate.
The REVOCABLE LIVING TRUST becomes irrevocable upon the death of the trustor.
The trustee or successor trustee (the person you appoint to handle the trust after your death) would then transfer ownership to the beneficiaries you named in the trust. In many situations, that process can be private, with no court involvement, and take very little time. When all of the trust property has been transferred to the beneficiaries, the trust ceases to exist.
Guidelines for a Revocable Living Trust
By setting up a LIVING TRUST, you can set guidelines for how your assets will be distributed. In addition to being able to choose your beneficiaries and choose the amount that each one receives, you can also get into more specific details. You can choose the exact date that you want your assets to be distributed and allow for assets to be distributed only after certain conditions have been met by the beneficiaries.
Estate Tax Minimization
By using a LIVING TRUST, you can be careful to minimize or eliminate any estate tax liability.
If you set up the trust to be an irrevocable trust, you can remove assets from your estate. This lowers the total amount of assets that you have in your estate, which could allow you to get under the estate tax exemption. This will eliminate the possibility of your beneficiaries having to pay estate tax when you die.
Protect Your Assets
When you put your assets into an Irrevocable Living Trust, this ensures beneficiaries are protected. The assets in an irrevocable trust are protected from creditors and lawsuits. Even if you owe someone money when you die, creditors cannot go after assets in your irrevocable trust. These assets can then be distributed at the proper time to your beneficiaries.
This is for information only and not the providing of legal or tax services. You should be careful about setting up a living trust and contact an attorney.
“Helping People, Moving Forward, Developing Relationships and Protecting Property Values”
Professional REALTOR® agent representation and help for estate administrators and executors, attorneys, estate planners, income tax professionals, fiduciaries, conservators, trustees and heirs, with listing and sale of trust and probate estate properties at Orange County, California
HARRISON K. LONG – REALTOR® and broker associate, GRI – Coldwell Banker Residential Brokerage – 949-854-7747 (phone) – ExploreProperties@gmail.com (email) – CA DRE 01410855 – SFR short sale and foreclosure resource certified by the National Association of REALTORs® – now serving as an appointed director at California Association of REALTORs® – attorney member of the California State Bar #69137