A trust is a legal document that takes care of your assets while you are alive and disposes of your assets after your death. It is the centerpiece of most estate plans. A revocable trust is a trust that can be changed, amended, or revoked during the creator’s lifetime. The creator of a trust is typically called the “grantor,” “settlor,” “trustor,” or “trustmaker.” A revocable trust generally becomes irrevocable after the grantor’s death. For most people the purpose of the Living Trust is two-fold:
- Avoid Probate: Probate can be a long and expensive process. By establishing a Living Trust and properly “funding” or transferring ownership of your assets into the Trust, you can avoid probate. This can save your estate significant money, as well as ensure that your assets are transferred to your chosen beneficiaries in a timely manner.
- Sophisticated Asset Transfers: Most of us dread the thought of giving large sums of money to young or irresponsible adults. A Living Trust allows you to do more sophisticated asset transfers to your heirs. Whether it’s giving your heirs specific amounts at specific ages, or requiring them to complete educational requirements, A Living Trust gives you the flexibility to decide how and when your assets will be distributed to your heirs.
Anytime you draft a trust it also essential that you have a Will. This Will is typically called a “Pourover” Will. It accomplishes two main purposes:
- A Pour over Will will direct that any assets that have not been properly funded into your Trust while you are still alive are put into your trust after your death. It is a safety net in case you have any assets not in your trust.
- A Pour over Will is also your opportunity to name a Guardian of your children in the event something happens to you while they are still minors.