A Living Trust is document signed during the client’s lifetime. It names someone to manage the client’s assets during his or her lifetime and distribute assets after the client’s death. It is called a” living trust” because it is effective during a client’s lifetime. The term “revocable,” as related to a living trust, indicates that a client may change the Trust during his or her lifetime. The creator (called the Settlor) of the trust often acts as the trustee until his or her death.
4 Main Advantages to a Living Trust
- Avoid Probate
- Financial Management During Incapacity
- Reduce or Eliminate Estate Taxes
- Control Distribution
Why Would I Want to Avoid Probate?
It’s Expensive. When someone dies who owns money, stocks or real property usually the family must present the will to the court to have a personal representative appointed to handle the administration of the estate. This court process is called “Probate”. Probate is expensive and time consuming. Attorney’s fees, are based upon the gross value of the probate assets, computed as follows:
• 4% of the first $100,000
• 3% of the next $100,000
• 2% of the next $800,000
• 1% for value over $1,000,000
The Executor is entitled to the same amount. For example, an estate with a gross value of $800,000 will pay $25,000 in attorney’s fees and another $25,000 for the Executor. In addition, there are various costs associated with the probate procedure, for example, court filing fee and publication of the Notice of Death, which total approximately $1,500.
Finally, probate is a lengthy process and the proceedings become publicly available.
Estate Planning Saves Money in the Long Run
Ah life, there is always a choice! In this case, either proactively invest a little time and money now to get a solid plan in place, or maneuver blindly through a costly crisis down the road. Sometimes a great plan starts with a good question! What questions do you have? I encourage you to write them down as you think of them and be in touch with a trust and estate professional like myself to get the answers.
You CAN do it! There’s a great quote by Marcus Aurelius: “If you are distressed by anything external, the pain is not due to the thing itself, but to your estimate of it; and this you have the power to revoke at any moment.”
You are welcome to print this Free 30 Minute Legal Consultation and use it to get some of your initial questions answered at no charge!
This blog contains general information and is not meant to apply to a specific situation. Please seek advice of counsel before proceeding as each case is unique.