ANSWERS FROM A CROWN POINT ESTATE PLANNING ATTORNEY

What is a living trust?
A trust allows one individual, the trustee, to hold property for the benefit of another, the beneficiary. A living trust, or “inter vivos” trust, is created while the grantor, the creator of the trust, is alive. This estate planning document can act much like a will, allowing you to possess and control your property while you are living and to pass your assets on to your loved ones upon your death without probate court involvement. A living trust can hold a variety of property, including bank accounts, stocks, bonds, car titles and houses. Although you can serve as a trustee for your living trust, you can also name your spouse, your child or your bank as a trustee, co-trustee or successor trustee.

What are the benefits of a living trust?
Living trusts offer a variety of benefits, including the ability to avoid probate and guardianships. Should you become disabled, a living trust can help you avoid guardianship. Generally, disabled individuals have a court-appointed guardian to care for their affairs, but if you have a living trust, your trustee or successor trustee can manage your financial matters.

Because assets in a trust do not go through the probate process, a living trust can save your loved ones time and money. If you own real property in another state, a living trust can also help avoid multiple probate proceedings in other states. Avoiding probate allows the trustee to distribute property immediately, instead of waiting for the court to select a personal representative who is authorized to make distributions only after court approval. While a will becomes public, a trust allows you to privately distribute your estate. A living trust can also save you attorney fees, personal representative fees and court costs by avoiding probate.

What are some disadvantages of living trusts?
A trust is more difficult to create and maintain than a will. One of the first steps in creating a trust is to place all of the assets into the trust. If you fail to place all of your property in a trust, the property you missed will need to go through probate. Even though trusts may save you and your loved ones money in the long run, they are more costly to set up than wills. When making a living trust, it is also important to remember that the trustee will not be monitored by a judge so it is beneficial to select a responsible person who you can trust to handle your assets properly.

Do living trusts provide asset protection or tax benefits?
Living trusts offer little to no asset protection benefits as creditors are entitled to reach your property in a trust during your lifetime to the same extent that you can and may be entitled to make claims against your property upon your passing. They also do not help you avoid estate taxes any more than a will. A properly structured will or living trust can help reduce or eliminate estate taxes. Additionally, a living trust will not assist you in qualifying for Medicaid because the trusts funds are considered “countable resources”.

Do I need an attorney to make a trust?
A living trust is created when a grantor and trustee establish the terms of the trust in writing. As a Crown Point estate planning lawyer with more than 20 years of experience, I am well-equipped to assist you in creating a living trust to help you avoid a guardianship and your loved ones avoid the cost and effort of probate. I can explain the benefits and disadvantages of a living trust for your unique situation. Take advantage of my free initial consultation to learn more about what estate planning tools are best for your family or contact my firm today!