When do I need a living trust?

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Updated: 4/13/2007 3:35 pm
A living trust is a legal document drafted by an attorney and is an alternative to a will. If your property passes by will, a probate court action will generally be necessary after your death. However, if you prepare a living trust, no probate will be required after your death to transfer your property to heirs and beneficiaries. Although preparing a living trust is slightly more expensive than preparing a will, many people prefer this alternative because the costs and delays of a probate court action can be avoided. In addition, a living trust may minimize the estate taxes which must be paid. The person creating the trust can choose the length of the trust, the powers and duties of the trustee, the time the trust income and principal will be distributed, a guardian for the minor children, as well as many other options. A trust will be based on the creator's specific needs and desires. A living trust must be created during the lifetime of the creator, but it may be changed, or even terminated, at any time before death. After death, the trust cannot be changed. Its provisions must be followed as the creator provided. If you prepare a will, assets exceeding six hundred seventy-five thousand dollars. will normally be subject to an estate tax, which ranges as high as 55 percent of the value of your assets. If you own real property, this six hundred seventy-five thousand dollar value may be reached very quickly. However, preparing a living trust, rather than a will, may allow you to pass up to one million three hundred thousand dollars in property to your minor children and other beneficiaries without incurring this estate tax. For more information regarding living trusts, please contact an attorney.
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