Attorney talking to an adult couple going over their living trust
Published on July 10, 2023 by Cipparone & Cipparone PA

Planning for the future is an essential step in ensuring that your assets are managed and distributed according to your wishes. One solution that can help achieve this is to establish a living trust. A living trust, unlike a will, can actively prevent probate and provide you with enhanced control over the management and distribution of your assets. In this article, we will explore how a living trust works, its benefits, and how to set one up.

What is a Living Trust?

A living trust is a legal document that establishes a trust and transfers your assets into it while you are still alive. You serve as the trustee and have full control over the assets in the trust. The trust also names a successor trustee who will manage the assets in the trust after you pass away.

How Does a Living Trust Work?

When you create a living trust, you transfer ownership of your assets into the trust. This includes property, investments, and other assets that you want to protect and manage. You can amend the trust at any time, and you can continue to use and manage the assets in the trust as you did before.

As the trustee of the trust, you have full control over the assets in the trust, and you can make changes to the trust at any time.

The trust also names a successor trustee, who will take over the management of the assets in the trust after you pass away or become incapacitated.

Benefits of a Living Trust

Avoiding Probate: One of the primary benefits of a living trust is that it can help your assets avoid the probate process, which can be time-consuming and costly.

  • Avoiding Probate

    • Probate is the court-supervised process of distributing assets after a person’s death. Probate can be time-consuming, costly, and public. A living trust effectively prevents this scenario. By transferring ownership of your assets into a living trust, you can ensure that they are distributed according to your wishes without the need for court involvement.
  • Maintaining Privacy

    • Unlike a will, which becomes a public record once it goes through probate, a living trust is a private document. The distribution of assets does not become a public record, providing greater privacy and confidentiality.
  • Protection in the Event of Incapacity

    • If you become incapacitated, your successor trustee can manage the assets in the trust on your behalf without the need to go through a formal guardianship proceeding. This helps ensure your assets are managed in accordance with your desires, offering enhanced protection and peace of mind.
  • Customizability

    • You can customize a living trust to meet your specific needs and goals, making it a flexible tool. A living trust is a flexible tool that can be customized to meet your specific needs and goals. You can specify the distribution of your assets after your passing and incorporate provisions for situations like incapacity or other contingencies.

Setting Up a Living Trust

Setting up a living trust involves several steps:

  • Choosing a Trustee

    • You will need to choose a trustee to manage the trust after you pass away. This can be a family member, friend, or professional trustee.
  • Drafting the Trust Document

    • The trust document must be drafted to specify how the assets will be managed and distributed. An experienced attorney who comprehends the legal prerequisites of living trusts should create this document.
  • Funding the Trust

    • You must transfer the assets you wish to safeguard into the trust. This involves changing the ownership of the assets from your name to the name of the trust.
  • Updating Beneficiary Designations

    • You will need to update the beneficiary designations on your retirement accounts and life insurance policies to ensure they align with the trust.

5 Negative Consequences of Not Having a Living Trust

  1. Probate

    • One of the most significant drawbacks of not having a living trust is the need to go through probate. Probate is the legal process by which a court oversees the distribution of assets after a person’s death. The probate process can be time-consuming, and costly, and can tie up assets for months or even years. Furthermore, probate entails a public process, implying that it will publicly disclose the details of your estate and its distribution.
  2. Lack of Control

    • Without a living trust, you may have less control over how your assets are distributed after your death. Without clear instructions on how you want your assets distributed, the court will follow state laws to determine how to distribute your assets.
  3. Family Disputes

    • Without explicit instructions regarding your asset distribution preferences, family members might engage in disputes over the division of your assets.. This can lead to costly legal battles and can cause family strife.
  4. Lack of Privacy

    • If you do not have a living trust, your estate will go through probate, which is a public process. This means that your estate’s details and distribution will become public knowledge, revealing information such as the value of your assets, the identities of your beneficiaries, and any dispute particulars that may arise.
  5. Delayed Distribution

    • Probate can be a lengthy process. Your beneficiaries may have to wait months or even years before they receive their inheritance. This can cause financial hardship for your loved ones and prevent them from receiving the assets they need.

Secure Your Legacy with a Living Trust and the Help of Cipparone & Cipparone

A living trust offers numerous benefits and serves as a potent tool to guarantee the management and distribution of your assets align with your wishes. If you have any questions about setting up a living trust, the experienced attorneys at The Law Office of Cipparone & Cipparone are here to help. Contact us today to schedule a consultation and learn more about how we can assist you with your estate planning needs.

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**This blog is for general informational purposes only. Cipparone & Cipparone, P.A. does not distribute legal advice through this blog. As such, this blog does not constitute legal or other professional advice, and no attorney-client relationship is created between the reader and Cipparone & Cipparone, P.A.

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