Asset Protection 101

Posts Tagged ‘living trust’

Why do I need a Living Trust?

Sometimes, living trusts are oversold, so a lot of people find themselves asking ‘why do I need a living trust?’ For anyone who needs a living trust, a living trust can be of great benefits. In order to establish if you need a living trust or not, first let’s examine the ins and outs of living trusts. In general, a living trust provides asset protection for the person setting up the living trust.

How does a living trust work?

In a typical living trust, the husband and wife can either set up living trusts separately or they can set up a joint living trust. Each of them then transfers their assets into their own living trust if they set up separate living trusts.

What happens to a living trust when I die?

When one of them dies, the disposition of the assets in the living trust is controlled by the terms of the living trust. If the couple also has a will, the will does not govern the assets in the living trust. The assets in the living trust bypass probate. This is one of the advantages of setting up a living trust and is also the big difference between a living trust and a will.

Reasons why you might want to establish a living trust

• living trust assets avoid probate
• estate taxes savings
• a living trust can be revocable so you can cancel the living trust at any time
• help with liability protection
• Irrevocable living trusts can avoid probate and provide income tax benefits as well as eliminate estate taxes
• privacy – a trust is a private document and not available for public viewing unlike a will
• a living trust can go into effect immediately
• you can add assets into the living trust or take out any assets at will.

A living trust can be used in asset protection. There are many types of trusts. When set up correctly, a living trust can be gem in estate planning as an asset protection strategy. A living trust helps avoid probate. However, living trusts usually do not protect your assets against lawsuits or liens. There are many seminars on living trusts but they rarely discuss what living trusts cannot do for you. A living trust can be a revocable living trust or an irrevocable living trust. There is also a big difference between living trust and will. If you are considering setting up a living trust for asset protection purposes, make sure you understand how living trusts work. You should also look into annuity living trusts and family living trusts.

In general, you need to consult a living trust attorney before you set up a living trust. The living trust attorney will draw up the living trust documents for you. How much the living trust attorney charges for drawing up the living trust documents depends on the state the living trust attorney is in. In California, for example, a living trust attorney in Southern California usually charge a lot more than a Denver living trust attorney. There are living trust forms online for you to set up a living trust yourself if you know what you are doing.