Should You Make Your Own Living Trust?
Nobody wants to think about dying--or possibly being incapacitated later in life. But somewhere along the line it's vital to make a plan to protect assets so they can be passed on to heirs.
When it comes to creating a living trust, one of the big questions is do you create a revocable trust or an irrevocable living trust?
Here's breakdown of what a revocable living trust is and the pros and cons of that particular form of trust.
Tip No.1: What is a Revocable Trust?
There are two basic kinds of living trusts: revocable and irrevocable. A revocable trust is simply one where the person who creates the trust-commonly known as the trustor or grantor-can change or revoke any part of the trust during their lifetime.
You still set up the trust with a trustee, usually a family member, and that trustee still has the power to legally manage the assets of the estate during the trustor's lifetime, as well as manage the affairs of the trustee in the case of incapacitation.
Trustees of a revocable trust differ in that they cannot exercise the assets for personal gain unless granted written permission from the trust.
Tip No.2: Revocable Trust Pros
Living trusts are far better than simple wills in that they allow the trustor to articulate their specific desires to the trustee. (Rather than just handing assets over into a bucket.)
Another key advantage of a revocable living trust is the ability of the trustee to handle the trustor's affairs if they become sick or disabled.
What separates the revocable version is how much less paperwork is involved in its creation, as opposed to an irrevocable trust.
Tip No.3: What a Revocable Trust Can't Do
Revocable trusts do have limitations, namely the way it is seen by the IRS. Because they are seen as fluid, the IRS deems all income derived from the trust as taxable income.
Also, you won't see any savings on probate fees. It turns out being flexible does come with a price.
There's never been a better time to find the resources you need to avoid lawyer fees--and outrageous estate fees and taxes.
When it comes to creating a living trust, one of the big questions is do you create a revocable trust or an irrevocable living trust?
Here's breakdown of what a revocable living trust is and the pros and cons of that particular form of trust.
Tip No.1: What is a Revocable Trust?
There are two basic kinds of living trusts: revocable and irrevocable. A revocable trust is simply one where the person who creates the trust-commonly known as the trustor or grantor-can change or revoke any part of the trust during their lifetime.
You still set up the trust with a trustee, usually a family member, and that trustee still has the power to legally manage the assets of the estate during the trustor's lifetime, as well as manage the affairs of the trustee in the case of incapacitation.
Trustees of a revocable trust differ in that they cannot exercise the assets for personal gain unless granted written permission from the trust.
Tip No.2: Revocable Trust Pros
Living trusts are far better than simple wills in that they allow the trustor to articulate their specific desires to the trustee. (Rather than just handing assets over into a bucket.)
Another key advantage of a revocable living trust is the ability of the trustee to handle the trustor's affairs if they become sick or disabled.
What separates the revocable version is how much less paperwork is involved in its creation, as opposed to an irrevocable trust.
Tip No.3: What a Revocable Trust Can't Do
Revocable trusts do have limitations, namely the way it is seen by the IRS. Because they are seen as fluid, the IRS deems all income derived from the trust as taxable income.
Also, you won't see any savings on probate fees. It turns out being flexible does come with a price.
There's never been a better time to find the resources you need to avoid lawyer fees--and outrageous estate fees and taxes.
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