A living trust can offer benefits to people from all walks of life – young and old, wealthy and those of modest means. There are many types of trusts available to meet widely varying goals, but they must be crafted and maintained with care to achieve the desired results.
At Pierro, Connor & Strauss, a living trust lawyer can help determine whether a living trust is right for you. In many cases, a living trust is advantageous but in other cases, a living trust attorney will determine whether other estate planning tools better suit a client’s needs.
What is a living trust?
A living trust is a trust that is created and funded during the lifetime of the creator (also called the settlor or the grantor). This is in contrast to a testamentary trust, which is created according to instructions in the settlor’s will and therefore is not created or funded until their death.
A living trust can be either revocable or irrevocable. In order to avoid probate but retain flexibility, a revocable living trust (RLT) paired with a properly drafted will is a powerful tool. An irrevocable living trust can allow the creator to provide for a beneficiary without jeopardizing government benefits, such as in a Special Needs Trust (SNT) or Medicaid Asset Protection Trust (MAPT).
A revocable trust can be modified, or even dissolved, if the creator so chooses. When paired with a carefully drafted will, known as a pour-over will, the grantor may be able to make changes to asset distribution plans without the formality of changing the will and in a way that bypasses the probate process. However, a revocable trust does not protect assets from creditors or necessarily limit tax exposure because the grantor can dissolve the trust and reach the assets at any time.
An irrevocable trust is more firmly fixed. Once created, it cannot be dissolved, and allowable changes are minimal. However, because ownership rights over the assets are separate from the rights of the settlor and the beneficiary, a buffer is formed. The assets are not counted among the assets of either party, thereby reducing taxes, protecting assets from creditors, and keeping the trust property from being counted against the beneficiary when determining eligibility for government programs.
Should you consider creating a living trust?
Whether to create a living trust is a very personal decision. No two people are in exactly the same situation. A living trust attorney will help you customize your plan to your needs and goals.