Many people have heard about living trusts but are confused by the differences between a living trust and a will. Many also wonder whether or not they need a living trust as opposed to a will. First, it's important to understand the definition of a living trust. A living trust is a legal document that you create during your lifetime. Just like a will, a living trust says exactly what you would like to happen to your property and assets. The most notable difference between a living trust and a will is that a will becomes effective only after you pass away and after it has been entered into probate. A living trust can bypass the process of probate, which can often be costly and time-consuming for your loved ones upon your passing. A living trust allows your trustee to carry out any instructions that you have left in the trust at the time of your death, or if you are unable to manage other assets of life due to incapacity.
One of the most common questions lawyers receive is, "Do I need a living trust?"
If you have complicated financial or personal circumstances, you may want to consider contacting a Los Angeles lawyer to draw up a living trust. Complex situations where you may want to contact a lawyer include substantial assets, a blended family, closely-held business interests, or property in other states. It's important to use an attorney to draft your living trust so that your wishes are carried out exactly as planned upon your passing or incapacity. Your lawyer can also help you understand and decide on what type of trust is best for your personal situation – a revocable living trust or an irrevocable living trust.
A Revocable Living Trust vs. an Irrevocable Living Trust
A revocable living trust allows you to transfer your assets into the ownership of the trust. You control these assets as the trustee and you can revoke the trust or change it whenever you please. The assets will pass directly to your beneficiaries without the time-consuming and costly probate process when you pass away. These trusts do not avoid or minimize estate taxes.
An irrevocable living trust allows you to give away your assets during your lifetime and just as the title suggests, is irrevocable. Once you have given away your assets, you no longer have any control or interest in said assets. They are no longer considered part of your estate and aren't subject to estate taxes, as those of a revocable living trust are. This type of trust is appropriate in rare circumstances.
Contact a Los Angeles lawyer today to learn more about living trusts and what type of trust is best for you and your situation.