Living Trust Fund Information
A living trust fund is an important part of an individual's estate plan. It helps dictate what happens to his property during his lifetime and who manages the property after his death. A common mistake is to confuse a living trust with a last will. Both have some inherent commonalities and are essential parts of a complete estate plan, but each serves different functions.
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Why Use a Living Trust?
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A living trust is a flexible estate planning tool. A qualified estate planning lawyer will be able to sit down with you and draft one of these documents to your specifications and needs. It can protect your finances if you have little experience with money matters. A living trust can also be quite useful if you don't have the time to try and deal with complex finances.
Function
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When you prepare a living trust, assets (stocks, homes and bank accounts, for example) are placed into a "trust." The assets are administered for your benefit by the living trust while you are alive. Upon your death, the trust is transferred to predetermined beneficiaries. The "trustee" determines the beneficiaries, and this is normally the individual preparing the trust.
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Advantages
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By preparing a living trust, you ensure that all assets will be managed according to the trust. This fact remains true even in the unfortunate situation where you could not manage the assets yourself. Also, a living trust can establish a successor trustee. The successor can take over management of the trust if the original trustee dies.
Similarities to a Will
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Living trusts and last wills are each designed to establish ownership of property and assets. Both are essential for distributing your personal property to beneficiaries upon your death.
Whether you have a living trust or last will, there are steps which need to be taken upon death (appointment, publication, inventory, payment of expenses, distribution of assets and accounting). Essentially, both documents have the same requirements in this regard.
You can find forms online to draft either a living trust or last will, but it would be better to have a qualified estate planning lawyer draft these estate plan documents. The online forms do not provide an actual lawyer to answer questions and provide guidance in preparing estate plans.
Differences from a Will
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Assets can continually be placed into a living trust fund throughout your lifetime. A last will takes effect upon your death. A living trust can be included in a will, but not vice versa.
If you are looking to name a legal guardian for minor children (in case of parental death), you should prepare a last will. Living trusts are concerned with property and assets, but are not used for matters of minor children.
A living trust fund, unlike a will, may continue after your death. It may continue to grow until it is ultimately distributed. Often, there are preexisting conditions built in wherein a minor child will not receive assets until a certain age.
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References
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