A living trust is not a substitute for a will, but it can offer individuals with sizable assets or unique estate planning needs a more effective way to leave a lasting legacy for their loved ones. Alperin Law’s dedicated legal team can help you determine if a living trust is the best way to accomplish your estate planning goals.
How a Living Trust Works
Living trusts are trusts that go into effect during the grantor’s lifetime, as opposed to testamentary trusts that only go into effect after they have passed away. There are two main types of living trusts—revocable living trusts and irrevocable living trusts:
- A revocable living trust lets you transfer ownership of assets into the trust while retaining control of their use as the trustee. You can change the terms of the trust at any time, but the trust will become an irrevocable trust after you pass away.
- An irrevocable living trust requires you to permanently give up legal ownership of your assets and appoint another person or a third-party entity to act as the trustee. This means, the assets are no longer considered part of your estate and are, thus, not taxable after your death. Once created, the trust can’t easily be modified or terminated.
Revocable living trusts are the most common type of trust. Irrevocable living trusts are generally used to reduce taxes or protect assets while planning for Medicaid and/or long-term care needs. However, they can also be used to help protect the interests of a beneficiary who can’t manage their own funds effectively or who has a disability that requires government benefits for medical care and the costs of daily living.
Benefits of a Living Trust
While a living trust isn’t the right choice for all estate planning needs, it can offer a number of important benefits. For example:
A living trust protects your privacy.
Trusts keep your assets out of probate, which is a public process. Only the trustee has access to your personal financial information.
A living trust saves time and money.
The trustee will immediately be able to take care of your funeral and burial costs without the approval of the probate court. This means, your family won’t have to wait for access to the funds they need to make your final arrangements while they are still grieving your passing.
A living trust is harder to challenge in court.
If you are planning to disinherit a family member or leave unequal asset shares to your heirs, it’s quite possible your estate might be challenged. However, it’s more difficult to win litigation involving a trust than a case involving only a will.
A living trust can manage more complex estate planning needs.
If you have sizable assets, are part of a blended family, or are in a long-term relationship with an unmarried partner, the added flexibility of a living trust makes it easier to distribute your assets as you see fit.
Assets Included as Part of a Living Trust
Almost any type of asset can be owned by a living trust. This includes:
- Real estate
- Bank accounts
- Investment accounts
- Tangible personal property
- Fine art, antiques, and collectibles
- Oil, gas, and mineral rights
- Copyrights, trademarks, patents, and other forms of intellectual property
- Business interests
The process of transferring assets into a trust is called funding the trust. The steps involved depend on the type of asset, but you are generally changing titles or other ownership documents from being in your name to being in the name of the trust.
Although you can include nearly all of your assets in a living trust, the trust must be structured correctly to be effective. It is vital that you consult with an experienced estate planning attorney to determine the best way to set up your living trust.
Do You Need to Speak With a Lawyer About Estate Planning?
If you need to speak with an experienced estate planning lawyer, please contact us online, or call our Virginia Beach office to schedule your free consultation. We have offices throughout Virginia, including Chesapeake, Newport News, Norfolk, and Suffolk.