Living Inter-Vivos Trust
How will your heirs remember you…bewildered with a public probate mess or estate plan?
Purpose of a Living Trust is to Distribute Assets from Your Estate
The living trust is familiar to many people. It is also called an “inter-vivos” trust. Translated from Latin to English it means, “among the living.” It’s primary purpose and design is to privately distribute and bring order to your estate. It addresses your deepest desires and fears by allowing you to decide in advance who gets what and when. You can alter or cancel a living trust at any time. A living trust allows your heirs to avoids an expensive, time-consuming, and very public probate process with attorneys. Wouldn’t you prefer a confidential settlement of your affairs?
Living Trust as the Bottom-Line Beneficiary
A living trust is your foundational trust. It lies underneath all your other assets, e.g. Corporate stock, LLC shares, Partnership interest, etc. Your living trust is the stockholder, shareholder, interest holder of these other assets. The living trust is designated as the beneficiary of your Business, Realty Land, Holding Trusts. Your “successor trustee” manages and/or distributes these assets after you pass away. Setting up a living trust gives great peace of mind to your loved ones and heirs.
Privacy of Distribution — You May Still Require Other Trusts
Given the value of living trusts, you might ask why not just put all of your assets into a living trust and forget about the other kinds of trusts. The answer is simple: throughout this site, we emphasize the value of privacy as your first line of defense. Most living trusts provide privacy only for distribution of your estate. It does not necessarily provide privacy for your assets. Generally, only Real Estate Trusts, Holding (personal property) Trusts and Business Trusts can offer true anonymity.
When Should You Start Your Living Trust?
The ideal time to set up your living trust is at the time of any major life event, such as when you get married or divorced, buy real estate, have a baby, get a new job, purchase life insurance, begin a new stock portfolio, face a major medical event, or are about to inherit assets. You are never too old – or too young – to benefit from the formation of a trust.
No matter what age you are when you encounter your financial milestones, you need to have “that” heart-to-heart discussion with your partner and make sure you are in agreement about what will happen should one of you not come home tomorrow. Does life insurance pay off the mortgage, or start a college fund?
Living Trusts: Advantages
- Privacy: If you have a living trust, distribution of your assets remains confidential, but if your estate were to go to probate, they would be open for public discussion and possible challenge.
- Time: A trust is fast and avoids the 6-to 18-month delays of probate.
- Cost: Having your estate in a trust eliminates attorney fees and probate taxes.
- Flexibility: You can change or amend a revocable living trust at any time before your death, without a lawyer.
- Consolidation: A trust brings assets located in different states under the laws of a single state that you choose because it eliminates multi-state probate.
- Tax advantages: If you deed any property while you’re alive to your heirs, they may be taxed if they sell the house later. But there is generally no tax if the asset is passed via your trust after death.
- Cash flow: If you die without a will and your estate goes to probate, bank accounts and other similar assets are frozen until ownership is determined and title is transferred by attorneys and the court. Your family business cash flow is immediately controlled by probate attorneys. You can’t pay bills, you can’t collect rent checks, you can’t invoice your customers. Couldn’t this destroy the family business? A living trust gives your heirs immediate authority to continue operations. Bank accounts remain open, family investments continue uninterrupted, and income continues to flow to your business and/or beneficiaries.
- Streamlined: A living trust is lean in terms of accounting, administration, and minimal judicial review. For instance, after death, generally, the only tax requirement is that the successor trustee files a 1041 return within nine months.
- Pre-empts challenges: A living trust can successfully prevent challenges to distributions by disgruntled parties because you clarify exactly who is entitled to what – in advance. In a probate case, attorneys decide who is the next “owner” of “each asset.”
Real Estate Professionals
All professionals in the real estate industry are aware of the significance of title vesting. It is part of basic training. However, in an escrow or pending transaction the question about vesting is often unanswered. Clients are advised to seek outside counsel by all parties assisting with the transaction. Except the client is already mentally overloaded with issues and under financial pressure. The thought of expending more time to independently seek out yet another individual for advice and then sorting through the options is overwhelming to most clients. We have the solution for them. Send your clients to our site and let them explore for themselves the best way to hold title.
In today’s complex financial world, a living trust is the bare minimum for vesting. If privacy is a sensitive issue, add the real estate trust. Agents and brokers themselves know how important this is to provide a higher quality transaction. Give your clients peace of mind about their real property ownership for today and their heirs for tomorrow.
Revocable versus Irrevocable
By default in most states, all living trusts are revocable. This means that the creator of the living trust can amend or change or even revoke the trust at anytime. You can add or remove assets at anytime. You can remove and replace a trustee at anytime. You can add, amend or remove a beneficiary at anytime. It’s very flexible. However, once you’re dead, whatever is in writing, that’s it. How can a dead person revoke anything? It automatically becomes irrevocable.
In select cases the creator may decide by design to setup an irrevocable living trust. For example, grandma widow knows her health is getting bad. She trusts her sister to manage her affairs. She is determined to avoid family conflict over her assets. In this case, she creates irrevocable living trust with her sister as the trustee. This means no changes even while still alive. An irrevocable living trust has a specific purpose upfront. For most people, the revocable living trust is fine.
You have two choices – leave your heirs a public probate mess or a private trust roadmap.
To learn more, see the Living Trusts Comparison Page.
Tap into the Unique Power of Trusts
To get the best asset privacy you must have strategic guidance. We ask you key questions about context and goals. But only you can provide the answers. Once you work with us you’ll quickly understand why clients keep returning year after year. No one else has the depth or expertise with asset privacy except Trustarte. We’re here to personally assist you. Get the privacy your assets not only deserve, but need.
Investment advisers, attorneys, accountants, accredited investors, hedge fund managers, qualified purchasers, family offices and individuals seek out James. He designs very effective privacy solutions for them. These highly personalized relationships are essential for professional success.
Living Trusts vs. Probate
Benefits of a Living Trust
The biggest benefit of a living trust is that distribution of your estate remains private. Who is to receive what and when remains confidential. You can direct that an asset transfers quickly, an income stream is setup, a college fund is assured, or assets remain held for investment.
In contrast, those who pass without any instructions or just a simple will, expose their affairs to public scrutiny. Court appointed probate attorneys will decide who is the next owner of your assets. It is not on your schedule, it is the overloaded court. Plus the estate will pay probate fees.
Your living trust is an essential planning tool to avoid probate. It can preempt challenges by heirs, save money and time as well as provide your estate with tremendous latitude on private distributions.