A living trust is an estate planning arrangement in which the trust itself takes over ownership of specific property while you’re alive. Upon your death, ownership transfers to the designated beneficiary. While this may sound like a complex idea, it's a simple arrangement that offers many benefits. Here’s more information about how a living trust works.

What to Know About Living Trusts

How does it work?

Once the trust is set up, you can transfer ownership of a property into it. Although you aren’t the legal owner of the property, you can retain control if you appoint yourself as the initial trustee. The trustee is the person who controls and manages the property in a trust.

As part of the process of establishing the trust, you appoint a beneficiary to inherit the property upon your death. At that time, the beneficiary becomes the trustee.

Why should I have one?

One of the biggest benefits of a living trust is that it’ll avoid the lengthy and costly probate process. Probate involves paying a deceased person’s debts, distributing assets to beneficiaries, and resolving all legal and financial matters of an estate.

The terms of a living trust remain confidential and don’t become public, which may be important if privacy is a concern to you. Also, if you have an extremely valuable estate worth over $11.58 million, a living trust may help minimize estate taxes.

Do I still need a will if I have a living trust?

Yes—a living trust only accounts for specific property. All other property and assets need to be included and provisions made for them in a standard will. A will can also accomplish tasks a trust can’t, like appointing a guardian for children or pets.

When should I update it?

Update the trust after any major life event, like births, deaths, marriages, and divorces. Since trust laws can differ from state to state, visit an estate planning attorney, and amend your plans as necessary if you move to a different state. If your assets change because of an unexpected loss of income or a new windfall, make sure your plans reflect these changes.

If you want to set up a living trust, turn to Wills and Trusts Hawaii in Honolulu. These professionals offer comprehensive estate planning services, and they’ll help you establish a will, living will, trust, and power of attorney. Get more information about their services online, or call (808) 792-8777 to schedule a free consultation.