A living trust is an effective tool in estate planning that can help stabilize a family’s legacy. It’s a legal document created while you, the grantor, are still alive.
Similar to a will, a living trust defines your wishes with regard to your dependents, heirs, and assets. The main difference between wills and living trusts is that wills only come into effect after you die and the will has entered the probate process. A living trust, on the other hand, partially or entirely bypasses the costly probate process, allowing your successor trustee to carry out the instructions found on your living trust at your death, as well as if you become unable to manage your healthcare, legal, and financial affairs due to incapacity.
There are two kinds of living trusts: revocable living trusts and irrevocable living trusts. The more common type of living trust is the revocable living trust, which enables you to transfer all your assets into the ownership of the trust. As the revocable living trust’s trustee, you are able to maintain control of those assets, and can revoke or change the trust whenever you wish. It must be noted, however, that neither revocable living trusts nor wills minimize or avoid estate taxes. Living trusts do not reduce Pennsylvania federal estate tax, inheritance tax, and legal fees.
An irrevocable living trust, on the other hand, allows you to irrevocably and permanently distribute your assets throughout your lifetime. Once your assets have been given away, you renounce all interest and control in them. These assets will not be subject to estate taxes, as they will not longer be considered as part of your estate. Irrevocable trusts, however, are only appropriate in extreme situations.
Living trusts are most ideal for individuals with complex personal or financial situations, such as those with a blended family, substantial assets, and properties in other states.
If you wish to create a living trust, it would be in your best interests to seek the help of an experienced Nepa & McGraw attorney. Call Nepa & McGraw today at (570) 282-7050 for a free and confidential consultation without obligation.