A living trust is a powerful tool for individuals seeking to safeguard their assets. Avoid probate and dictate the distribution of your assets as you wish. Living trusts have become a popular choice in estate planning. Read more to find out why.
What is a Living Trust?
A living trust, also known as a revocable trust, is a legal document. The trust acts as a “bucket”, holding the grantor’s assets separately from the grantor. The grantor maintains control over the trust and has the flexibility to make changes or revoke it if necessary. A living trust keeps your assets out of probate and into your heir’s hands. This can save your family thousands of dollars and months or even years of heartache and headaches.
Key Functions of a Living Trust:
1. Probate Avoidance:
One of the primary advantages of a living trust is its ability to bypass the probate process. Probate is the court-supervised procedure for validating a will and distributing assets. By placing assets in a trust, they are not subject to probate, saving time and potentially reducing legal fees. If you only have a will, your assets will be subject to the possibly long and expensive probate process.
2. Privacy Protection:
Unlike a will, which becomes a public record during the probate process, a living trust provides privacy. The distribution of assets occurs privately and is not accessible to the public, allowing the family to maintain confidentiality.
3. Incapacity Planning:
Living trusts also serve as valuable tools for incapacity planning. If the grantor becomes incapacitated, the trustee can seamlessly take over the management of their assets. The trustee can manage assets without additional court approval. These assets can be anything like bank accounts, insurance policies, or other important items. Additionally, the trustee will ensure the grantor’s desires are carried out as written.
4. Flexibility and Control:
Furthermore, the grantor retains full control over the trust, including the ability to make any changes or revoke the trust. This flexibility distinguishes a living trust from other estate planning instruments. The grantor can specify beneficiaries of their trust and any stipulations to receive the benefits or assets.
5. Tax Efficiency:
You can structure your living trust with provisions to address tax considerations. Consult with a tax professional during the creation of the trust to optimize its design for tax efficiency.
Getting a Living Trust When You Have a Reverse Mortgage
In the complex landscape of estate planning, a trust is a valuable ally. When navigating the intricacies of a reverse mortgage, it provides a comprehensive solution for safeguarding your legacy for your heirs. Moreover, a trust can add a layer of comfort and security for your heirs, while avoiding probate.
Having a reverse mortgage does not prohibit you from getting a trust, but it does require additional research. Before your trust is finalized, provide the trust draft to your reverse mortgage servicer for review and approval. Approval of the trust by the reverse mortgage servicing company is imperative to avoid the accidental triggering of a maturity event. Once approved, you may move forward with recording your new living trust.
Additional Protections for Your Heirs
With a reverse mortgage, the loan becomes due upon the borrower’s death or move from the home. Without proper planning, heirs may face the pressure of repaying the loan or risk losing the property. Clear instructions for the reverse mortgage can be outlined in the trust to ensure a smoother transition for your heirs.
A living trust offers a versatile and effective means of managing assets and ensuring a smooth transition after death. Better secure your financial legacy and avoid probate by creating a living trust.
As with any legal document, seek advice from a qualified attorney to tailor a living trust to individual needs. By taking the necessary steps, individuals can provide peace of mind for themselves and their loved ones in the future. For a referral to a qualified professional to learn more about living trusts, please reach out to us for guidance. We are here to guide you to a more secure future. Find a reverse mortgage expert in your area here who can refer you to a qualified living trust professional.