A living trust simply refers to a type of trust that can be annulled by a settlor or grantor. Living trust is the most preferred kind of trust because assets can be passed to the beneficiaries without the probate process; hence it saves cost as well as time. Living trust safeguards privacy of a deceased in the distribution of properties. A substantial amount of money is a prerequisite in hiring a probate lawyer and the state also charges a fee depending on the net value of assets of a deceased. Living trusts and wills are important in planning for situations that are not anticipated. They both give unrestricted control to the grantor or settler of a will.

Settler or Guarantor

A settler or guarantor in a living trust may serve also as a trustee There are instances in which there may be two trustees or more. In such cases then they may choose to work together or individually; however they are both required to sign a formal document. If one of the settlers is not competent, then the other co-settler continues to manage the trust.

Negative aspects of a living trust

There are a few negative features of a living trust. The beneficiaries in a living trust are not entitled to be taxed on the inheritance. A living trust may be costly to set up and it gradually increases upon death of a settlor or creator. A living trust is normally costly to process compared to that of a will which is affordable. A trustee or grantor to a living trust is generally paid a certain fee annually that comes from the output of his/ her properties. This fee varies from one asset to another in the management of a will. A trustee is paid slightly more money if an estate is small. However the fees are not given to a trustee annually. In instances where a person dies and he/ she did not have a will or a living trust, then the trustee is paid the fees according to the net worth of an estate. In such cases a probate process is conducted in a court as required of the law. The assets of a deceased are identified by the court and distributed evenly to family members of the deceased.

This article is for information purposes only and not intended for legal advice.

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