A trust allows you to provide financially for dependents or other loved ones, such as children or grandchildren. A trust can be set up in various ways, depending on your individual needs and preferences. One of the most common types of trust is called a “living trust.”
A living trust is a type of trust that is established when you are still alive, as opposed to a testamentary trust, which only comes into effect in the event of your death. It is also sometimes called an inter vivos or revocable trust. This type of trust is typically meant to provide for loved ones such as children when they reach a particular milestone, such as reaching a specified age or finishing university.
When the beneficiary reaches the specified milestone, the trust becomes active, and they have access to the funds. The funds may be distributed in a particular way through a trustee as per your wishes, in order to prevent your beneficiary from mismanaging the money.
The Benefits of a Living Trust
Many people prefer to opt for a living trust as opposed to a testamentary trust for the following reasons.
One major advantage of a living trust is that it allows for the avoidance of probate, which is the legal process of verifying a will and distributing assets after a person dies. Probate can be a lengthy and expensive process, and it may involve court fees and legal expenses that can reduce the amount of assets available to your beneficiaries. By transferring assets into a living trust, you can avoid probate and ensure that your assets are distributed as per your wishes without the need for court involvement.
Avoid Will Variation Claims
A living trust enables you to avoid certain assets being subject to will variation claims because the living trust does not become part of your estate in the event of your death. This means that the way funds in the living trust are distributed is not subject to change after your death.
Setting up a living trust allows for greater flexibility in managing and distributing assets. Unlike a will, which only takes effect after your death, a living trust can be established during your lifetime and can be amended or revoked as you see fit.
How to Create a Living Trust
- Outline the terms of the trust with the help of a lawyer
- Transfer assets into the trust
- Appoint a trustee
- Appoint a beneficiary
When creating a trust of any kind, it is crucial to have the assistance of an experienced lawyer who can help you determine the best way to set up the trust and manage its distribution. At Munro & Crawford, our team has years of experience helping clients set up trust agreements that put their wishes first. Get in touch today to learn more about what type of trust might be right for you.