Our lives are unpredictable. How to make sure our house will still protect our family after we leave this world?
People like to use living trust. With a living trust, your assets are put into the trust, administered for your benefit during your lifetime, and then transferred to your beneficiaries when you die.
A trust takes effect as soon as it is created, even privately. It can be used to begin distributing property before death, at death, or afterwards, but it covers only property that has been transferred to the trust.
A big reason to use living trust is that it passes outside of probate, so a court does not need to oversee and involve the process, which can save your heirs time and money.
Probate is necessary when an individual dies owning assets exceeding $150,000 in his/her name. An inventory of your assets would be filed with the court & notice would be given to your creditors so they could file claims. The process would end once the court approved a final distribution of assets.
For an asset value of $500,000, the approximate cost for probating an estate is $26,000. This does not include special fees for the sale of assets, tax preparation, and litigation, according to Michael W Brown, Attorney at Law.
A living trust can help ensure that your assets will be managed according to your wishes even if you become unable to manage them yourself. It can be used to plan for disability or to provide savings on taxes.
With a revocable living trust, you can make amendments freely without the interaction of a third-party any time. It offers no asset protection from creditors or those who seek to sue you. Legal theory commonly allows a creditor to step into the shoes of the debtor (may change the beneficiary to their self).
An irrevocable trust cannot be terminated or revoked or otherwise modified or amended by the Grantor/Settlor/Trustor. Therefore it could protect assets from lawsuits, judgments and creditors.
This is not legal advice. Please seek appropriate legal advice before acting.