The living trust is an all-purpose estate plan document. As opposed to a will, a living trust allows you transfer assets outside probate, and even before death. Assets funded in a trust take assume the name of the trust; thus, trusts offer tax advantages by limiting the assets held in your name. Also, a trust cannot be contested or litigated. To avoid some costly probate process, estate tax and long duration of estate plan implementation, you need a living trust.
Revocable and irrevocable trust.
The revocable and irrevocable living trust perform the same function but operate in a slightly different manner. The revocable living trust permit change and flexibility of the trust. You can remove particular assets or change the named beneficiary in the trust. Altogether, a revocable trust can be cancelled or dissolved. Thus, this means that the trust maker retain the power over the trust during his lifetime.
However, the irrevocable living trust cannot be undone. Once the assets has been transferred into trust it cannot be changed. This type of trust is effective in reducing excessive estate taxes. A revocable trust usually turns permanent or irrevocable upon the death of the trust maker.
This trust is created for minor who are yet able to able money. The trust helps to keep the assets for the named beneficiary until they are able to handle them.
Special need trust.
A special need trust is prepared for desired beneficiaries with special need. Funds and assets are placed into this to ensure that the special needs of the individual can be met without also forfeiting their rightful government benefits.
Life insurance trust.
Life insurance trust is an irrevocable type of trust and also a very good way to avoid excessive estate taxes. The trust collects insurances on the grantor and use it for a named beneficiary in the trust.
An irrevocable life insurance trust (ILIT)
This type of special trust has an insurance policy for the trust maker; however its proceeds are not included in the gross value of the decedent’s estate for estate tax purposes.
Who should be the trustee in a living trust?
The difference between irrevocable and revocable trust is further experienced in the trustee named to manage the trust. For instance, when a couple decides to create a revocable trust, they could be stand for and name each other trustee, however, if an individual names himself as the trustee in the irrevocable trust, the purpose for which the trust is created would not be thoroughly implemented.
While some people use trust attorney and corporate trustee, other result to naming members of their family as a trustee. This could be a wrong move, as lot of problems can arise to this effect. It is expected that when naming a trustee, a professional capable of handling the complicated situation of estate plan and its implementation be selected. Contact a Florida estate planning lawyer near you for help.
Questions to ask your trust attorney
There are questions to ask your attorney on your first meeting in order to know to what extent their services would be and to as well build a lasting relationship. The questions include:
- Would you need a living trust or powers of attorney? What are the pros and cons of each?
- Would the lawyer execute the trust, etc. or would they only prepare the estate plan?
- Will the lawyer have you review every document drafted before establishing them? Keeping in touch would help you avoid misunderstandings and maintain clarity and consistency.
- When would they be available in case you have any pressing question or issue to discuss?
- Do they include disability and tax planning in their estate planning strategy?
- Would they help in reviewing and updating your estate plan particularly your living trust periodically?