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What you need to know when considering a living trust, part 1

As we discussed last week, a trust is set up so that a trustee can properly allocate assets or property to a beneficiary, or the person receiving the assets or property. Traditional trusts are written while the trustor, or grantor, the person giving away the assets or property, is living and the assets or property is to be given out upon the trustor's death. One could also consider creating a living trust, often referred to as an "inter vivos" trust, since it is implemented while the trustor is still alive.

A living trust is created while a trustor is alive, and can be changed or retracted at any time. This is also called a revocable trust. One of the benefits of creating a living trust is that you can avoid your estate going to probate. Probate is the court going through and paying debts and administering property following one's death. It is not uncommon for this process to take months.

Probate can also be costly, with court costs and attorney fees coming out of what would otherwise be given to their heirs. A living trust can also reduce taxes and can still be regulated in the event that a trustor becomes incapacitated.

If you are seriously considering a living trust to help protect your assets, you may find it helpful to speak with an attorney who is familiar with estate planning. A firm can help by sitting down with you to discuss your financial situation as well as your long-term goals. As you can see, creating a living trust may prove to be beneficial, but they can also be tricky and difficult to create by yourself.

Source: findlaw.com, "Living Trust Information," Accessed June 18, 2017

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