A living trust is an estate planning arrangement in which the trustee places ownership of certain assets into the trust while they are still living. Upon their death, ownership transfers to the designated beneficiaries. The terms of the arrangement can be altered by the trustee at any time, but after they pass away, the terms of the trust must be handled in the ways they have stipulated. To better understand this complex subject, learn more about common types of trusts and the benefits they provide.

Types of Living Trusts

In addition to the more common revocable trust, in which the terms of the agreement can be altered and assets shifted in and out, living trusts are also sometimes set up to be irrevocable. In this type of arrangement, the assets in ownership of the trust cannot be touched unless specific conditions are met, and the terms of the agreement cannot be altered. For example, a doctor or lawyer can place ownership of property into a trust to protect it from being lost in a malpractice lawsuit.

An asset protection trust is a living trust that holds ownership of certain assets on a discretionary basis. This can help reduce the costs associated with things like taxation, bankruptcy, and divorce.

A charitable trust is set up to give money to a designated charity. It’s an ideal avenue to help a worthy cause and can minimize gift and estate taxes in the process.

Benefits of Living Trusts

The primary benefit of a living trust is being able to bypass the probate process. During probate, the assets of an estate and the terms of a will are verified by probate courts, who then oversee the distribution of the estate. A living trust avoids this process entirely, giving you greater control over asset distribution. You will ultimately save on court costs as well.

Living trusts are private matters. Wills and other plans that go through probate are part of public record, but the terms of a living trust remain confidential.

A living trust might also reduce estate taxes for your heirs.

Differences Between a Will & Living Trust

A will must go through probate, while a living trust will not. Wills are only enacted upon the death of the signatory, but the terms of a living trust are enacted when the signatory is still living. Living trusts must be authenticated and signed by a notary public; a will does not require this step. From a legal perspective, the assets in a living trust are owned by the trust itself, while the assets in a will are owned by the signatory.

To see if a living trust is right for you, contact Ferraro Kruk & Ferraro LLP. Serving Jefferson County, PA, they offer representation in all aspects of estate planning, as well as in family and property law matters. Call (814) 268-2202 or visit them online to schedule a consultation.