7 Key Things You Must Know About Living Trusts: Part 2
In a previous post, we explored three key ideas about living trusts. Here are four more fascinating insights into how to make the most of these instruments to plan for your future.
- What a Living Trust Can and Can’t Do for You
A living trust can prevent your estate from going through probate court, delaying the finalization of passing assets to your beneficiaries. Even so, you still have the option of immediately transferring property to beneficiaries or giving them an inheritance in specific amounts and over time. Your trust might also be used as a power of attorney. A qualified estate planning lawyer might also suggest ways to leverage your trust to reduce state and federal tax burdens.
However, a trust is not bulletproof. A disgruntled family member left out of the trust, for instance, may mount a legal challenge to it, and persistent creditors may gain access to assets and funds kept in trust, depending on the nature of the instrument, the type of protections established and the tenacity of the creditor. Remember that the trust is just a tool; to work effectively for you, it needs to be established in the context of an overall financial and estate plan designed based on your goals and values.
- Funding the Trust the Right Way
Clients generally wonder how much they should put into trusts when they open them. You can open a trust for as little as one dollar. However, many people opt to include a large percentage of assets from the start. An attorney can help you make a strategic decision about funding the trust.
The fees associated with setting up the trust vary greatly, depending on many factors, including:
- Legal fees incurred by the lawyer
- The complexity of the assets
- The number of assets
- Where in the country (or world) the trust is established and
- Tax and business considerations.
- Can Anyone Draw Up a Living Trust?
Technically, anyone can put together a trust, but to ensure that your instrument serves your purposes and survives any legal challenges to it, strongly consider working with an attorney to draft it and modify as needed over time. Online living trust kits, while cheaper than attorney-assisted drafting, will likely leave your estate exposed and underprotected.
- Changing a Living Trust
Once you have drawn up the trust, you can add or delete assets. Consult your attorney about the most expedient and appropriate processes to accomplish such transitions to avoid tax issues or other consequences.
Our experienced team would love to know more about your goals for the future and help you develop an estate planning strategy that resonates with your values and gives you peace of mind. Please call us at (800) 827-7784 to discuss your next steps.