A living trust is an extremely flexible estate planning tool and be used for a number of reasons. Many people use a living trust as the foundation for their estate plan.
The key to making a living work is the transfer of title of the assets into the name of the trust. When the grantor creates a living trust and transfers the title of the assets to the trustee, upon the grantor’s passing the assets titled in the living trust do not have to go through the probate process.
A living trust is used in order to avoid the expense and delay of probate. Assets that have been titled into the name of the living trust will avoid the expense and delay of probate upon the death of the grantors. A living trust is a private document, and unlike a Will, is usually not filed in the probate court.
Another common reason for using a living trust is to protect against a probate conservatorship proceeding. If an individual creates a living trust and then subsequently lack the ability to manage his or her finances, the successor trustee named in the document can pay the bills and manage the assets for the benefit of the grantor, and avoid a conservatorship proceeding.
A living trust is an especially effective vehicle when an individual owns real estate in two different states. By transferring the title to the real estate in both states into the name of the living trust, the grantor avoids probate in both states.
Another common reason for creating a living trust is to hold assets in the living trust upon the grantor’s passing for the benefit of minor children or grandchildren. Creating a living trust and choosing a successor trustee who will manage the assets for the minor children or grandchildren allows the grantor to provide for the beneficiaries’ college expenses, and their health, maintenance, or support.
Additionally, by holding assets in the living trust after the grantor’s passing and incorporating a spendthrift provision in the trust, the assets in the trust are protected against the beneficiaries’ creditors and their spendthrift propensities. State law provides that a spendthrift protection clause will protect the assets in the trust from the creditors of the beneficiaries.
As individuals age it is quite common for a parent to establish a living trust and name a son or daughter to serve with him or her as a co-initial trustee. The son or daughter named as a co-initial trustee will assist the parent with the management of the assets and the payment of the parent’s liabilities.
There are many additional types of trusts which can be utilized for specific situations. These additional trusts include, but are not limited to:
- Special Needs Trust
- Charitable Lead Trust
- Charitable Remainder Annuity Trust
- Charitable Remainder Unitrust (CRUT)
- Standard Unitrust
- Net Income Unitrust
- Net Income with Makeup Unitrust
- Grantor Retained Income Trust
- Grantor Retained Annuity Trust
- Missouri Asset Protection Trust
- Qualified Personal Residence Trust
- Qualified Terminable Interest Property Trust (Q-TIP)
If you have questions concerning whether a living trust is right for your estate plan, please feel free to contact one of the attorneys at the law firm of Gregory E. Robinson, P.C.