Living trusts are usually set up so that any assets may be passed to inheritors or beneficiaries without necessarily going the probate way. Many people have experienced cases where, when owners of assets pass away, the beneficiaries fight over these assets just because there was no established living trust that will directly pass the assets to the real beneficiaries. They finally find themselves in the hands of the law and on legal courts where the court have to decide who takes what. Again the probate process may be expensive charging a fee according to what the deceased is considered worth.
An established living trust saves on time, money and is quite private comparing to probate process where you have heard cases where most the rich and famous after their granter died, so and so became richer for having been named the legal beneficiary. Living trusts may be expensive as a result of the federal estate tax levied. However a married couple can amazingly experience very low charges if they set up the tax with formula clause.
How do you establish a living trust? This involves an owner of an asset transferring the title of that asset from himself where he is a granter to a trustee of the trust to manage, for the benefit of himself and one other person. Also other lucky beneficiaries may be named after the granter dies where they can only get something when he dies.
A living trust may be personalized or corporate. With corporate trust, such as a bank is entrusted with the assets and the corporate trustees must show accurate and detailed records of all transactions that take place in the trust as long as it exists. Also the corporate trustees are entrusted to manage the investments held in the asset. The accounting of the trust are supposed to be presented to a court of law where need be.
With individual living trusts the granter presents a signed document (declaration of trust) where he names himself as a trustee and transfers assets to that trust. For this reason he/she is in full control of the assets. When the granter dies the person named in the trust automatically assumes the role. This process takes quite a short time and there is no much havoc of lawyers or courts in the process.
The living trusts differ from where you live. The US trusts may not be as of those of South Africa. The inter vivos trusts, testamentary trusts and bewind trusts. Depending on where you come from you need to get more information about the trusts so that you can have a general understanding. In most cases the living trust are under tax pressure but the main advantage is that the assets are protected from the hands of creditors if they are under a trust since the creditors can have no claim over the asset.
Establishing a living trust even though it may be expensive is a very important decision that saves your descendants from having to go through courts of law and overpaying for assets they could get for free right from you own very hands. Therefore start thinking in this direction.
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