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A living trust is a legal document that allows its creator, acting as the trustee, to hold title to assets inside of the trust. This may help those assets avoid probate, which may save thousands in legal fees and allow assets to be transferred much sooner. With a living trust, the grantor has the ability to revise it until he or she passes on. There are several other benefits that individuals may want to consider as well.
For parents with children, it may give them greater control over how and when their children have access to benefits inside of a retirement account or life insurance policy. If the trust controls the money, language can be added that allows the minor child access to it as the grantor sees fit. If such benefits were to pass directly to the minor child, a guardian may have to be named to oversee how the money is used.
A typical bank account is insured up to $250,000. However, a trust is insured up to $250,000 for up to five beneficiaries, which means that it can be insured for up to $1.25 million. Additional protection may be available for those who have six or more beneficiaries assuming that they all have equal interest in the trust.
For many people, a trust may be a powerful estate planning tool. A special needs trust may help parents take care of their children into adulthood while a living trust may be altered to meet an individual’s needs as they may change. Assets inside of a trust are generally held outside of an estate, which may make it easier to transfer them after the trust’s grantor passes on. An attorney may be able to help an individual create or modify a trust as needed.