Trusts are legal entities created to hold assets used for a person’s benefit. A settlor transfers the assets that will be used in the trust. A trustee manages the trust and distributes funds when needed. A living trust is created during the life of the settlor.
Who Controls the Assets in a Living Trust?
The settlor transfers assets to the living trust. These assets become the property of the living trust and are no longer owned by the settlor. If the trustee and the settlor are the same person, the settlor will still control the assets and decide how they will be used. If the settlor is not the trustee, the individual named as trustee will control the assets. A successor trustee should be named in the living will documentation in the event the original trustee dies or becomes incapacitated. If the trustee is temporarily incapacitated, she will resume her responsibilities when she returns to full capacity.
Why Should the Trustee Get a New Living Trust if He Moves to a New State?
A living trust will be recognized and accepted when the trustee moves across state lines. However, several reasons exist to obtain a new living trust in the new state. Language and execution requirements vary by state and some companies will refuse to honor the trust because they are not familiar with the language and execution requirements. As the trustee purchases property and chooses to transfer the property to the trust, having an in-state living trust will ease the process. All estate-planning documents, including the living trust, should be reviewed every few years to ensure that any life changes are accounted for in the documents.
What are the Benefits of Having a Living Trust?
A living trust offers several benefits to individuals. Private people maintain the privacy of their affairs after death by using a living trust to hold their assets. The trust distributes the assets it holds without going through probate and publicizing the finances of the deceased. Heirs receive their inheritance from the living trust faster than they would through probate. A living trust costs less and avoids the lengthy process that probate requires. And, it encourages individuals to evaluate their current estate plan and revise as needed.