Benefits of a Revocable Living Trust
by william_lako
 Money Talks Blog
September 28, 2012 04:32 PM | 2463 views | 0 0 comments | 86 86 recommendations | email to a friend | print | permalink

Last week I discussed the importance of having a Last Will and Testament in place as part of your estate plan. Another estate planning tool you should explore is a living trust. A living trust allows you to retain control of the trust property while you are alive. Should you become incapacitated and unable to handle your financial affairs, trust assets will not be subject to a court supervised guardianship or conservatorship, because the named trustee will have the legal right to step in and take control of trust assets. Additionally, once you die, the property held in the trust passes to your heirs outside of probate.

A living trust is revocable, which gives you the flexibility to make changes to it by removing or adding property, changing the provisions and beneficiaries, or terminating it if it no longer meets your needs. Living trusts are fully revocable and amendable.

When stripped of all the legal jargon, a trust is simply a contract, where a person, a grantor or donor, agrees to transfer assets to trustee for the benefit of a beneficiary, or multiple beneficiaries, who then receive the assets as stipulated in the contract. A trustee, who may or may not be the grantor, manages the trust assets and ensures the terms of the trust are faithfully carried out. The trustees are the legal owners of the trust property, but they are obliged to hold the property for the benefit of one or more beneficiaries, who can be individuals or organizations.

When you pass away, the assets in the living trust are distributed by the trustee according to the terms you establish in the trust. This means these assets are not part of your probate estate. An advantage to having assets in a trust is that your beneficiaries may receive them faster, rather than waiting the months or years it may take to settle your estate. However, a living trust does not avoid estate or income taxes, nor does it protect your assets from potential creditors.

William G. Lako, Jr., CFP®, is a principal at Henssler Financial, and a co-host on Atlanta's longest running, most respected financial talk radio show "Money Talks" airing Sundays at 10 a.m. on Talk 920 AM, WGKA.

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