The main benefit to a Living Trust is to avoid probate. To understand the Living Trust you must understand all the roles that each person involved in the trust will play. There are essentially four different parties to the trust:
1. Grantor. The Grantor is the individual who sets up the trust to protect their assets. They may also be referred to as the Settlor, Trustor, or Creator.
2. Trustee. This is the individual(s) established by the Grantor to manage the estate. This is usually the same as the Grantor so they may continue to control his estate in the manner he is accustomed. Some choose to name a Trustee other than themselves to manage the trust if his circumstances prevent him from being able to do so.
3. Successor Trustee. This is the individual(s) established to take over the original Trustee’s responsibilities if they are unable to do so for any reason, usually death or disability.
4. Beneficiaries. These are the individuals or companies that are to receive the benefits of the trust once the Grantor has passed away. Beneficiaries are mostly spouses and children, but can also be friends, other family members, charities, etc.
Once these roles have been established the trust is executed and must be funded. Funding the trust is a very important step in creating the trust. The trust must hold the assets that will be distributed at the time of death. In order to fund the trust the assets must be re-titled into the name of the trust. This is a very easy process and can be done quite quickly. This is crucial to having your estate avoid the timely and costly process of probate.
Upon the death of the Grantor the Trustee or Successor Trustee will act in the same manner as a representative would in distributing a Will. They will carry out the terms, conditions and instructions stated in the Revocable Living Trust. This usually will entail payment of taxes, bills, and distributing the assets.
Be sure to speak to an Estate Planner at Legal Awareness for Seniors to properly set up your trust and avoid probate.