In standard legal terms, a trust is a fiduciary, third-party relationship in which the trustor distributes an asset to the trustee, who then transfers the property to the beneficiary. In the broadest sense, trusts are normally set up to follow the last will and testament of a deceased individual.
Usually, trusts are established to prevent the tedious process of probate and expedite the transfer of ownership from a trustor to a beneficiary. Although the concept of trusts can be simple to grasp for some, there a variety of different types of trusts that can be used as a quicker alternative to a casual probate.
However, there are only four basic trusts that you should be made aware of. All four of these trusts have a varying degree of benefits that can accommodate your unique legal situation. These common trusts include:
In a practical sense, living trusts are instantaneous and convenient to set up. These trusts are designed to immediately go into effect when they are created. After a legal trust has been created, the trustor agrees to transfer all properties and assets to the designated beneficiaries by the successor representative.
There are a variety of benefits to establishing a living trust. One of the main benefits of creating a living trust includes that a trust effectively eliminates probate.
In addition, a living trust can also save you money versus paying exorbitant legal fees through the traditional probate process. Notably, a will is a public document that can be accessed by anyone. On the other hand, a living trust is a private document that will keep the transference of your assets accessible to you and your relatives.
Unlike living trusts, testamentary trusts do not go immediately into effect, even after the trustor dies. Since your will must be given to probate, as well as any trusts, testamentary trusts may take some time before they are effective. As a result, these types of trust are generally difficult to amend, mainly because any revisions you make to the trust must also be made to the will.
Revocable trusts work quite differently than living and testamentary trusts. Basically, revocable trusts allow you to retain ownership and control of the assets in the trust.
In this trust, you can change the terms and details of the trust, which include the beneficiaries and trustees. Because you are in control of this property, you can be taxed for these assets during your life.
An irrevocable trust is essentially the opposite of a revocable trust. In this trust, you surrender the control and ownership of the property to the trustees, making you incapable of altering the trust.
Since you are not in possession of this property, you are exempt from any accumulated taxes. Therefore, if you want to avoid excessive taxes, an irrevocable trust is an ideal option for you.
There are a variety of different trusts you can create to eliminate the probate process. Choosing the right trust and probate litigation lawyer in Coeur D’Alene can expedite the entire process of transferring valuable assets to its beneficiary.