Living trust and a last will are two particular estate document that be used to establish your estate wishes. Both document cater for what happens while you may be unavailable to have a say over your estate, however, the living trust does more than that. Living trust can covers three phases of one’s life: when you are alive and well, when you become mentally incapacitated and lastly after you die. Through a documented living trust, you can decide who handle you medical and financial decisions. You can also transfer your assets to a living trust. Living trust basically ease the process of transferring estate and choosing which trustee handles your financial and medical wishes. It is however worthy of note that there are revocable and irrevocable living trust. Both perform the same function, although, while the revocable trust permit changes in the term of the trust, assets placed in the irrevocable trust cannot be undone.
However, most people ask estate lawyers, how do I know whether I need a revocable living trust or just a will? This question sometimes asked from the estate myths that the living trust is only for certain class of wealthy individuals. Well, here are some details about a last will and living trust. This would serve as a based knowledge to the estate documents.
A will, formally called a Last Will and Testament, is a legal document by which you address the disposal of your possessions when you die. With a will, you choose your inheritors and give instructions on how and what they should receive. You can name anyone as your beneficiary, including friends, charity, etc. Without a will, your wishes are not known, and the estate laws of Florida will pass your assets to your default heirs (surviving spouse and direct descendants). Other types of will are pour over will and living will. However, a last will always require probate process.
A trust works the same way. But as opposed to a will, a trust allows you transfer assets outside probate, and even before death. Assets funded in a trust take assume the name of the trust; thus, trusts offer tax advantages by limiting the assets held in your name. Also, a trust cannot be contested or litigated.
Revocable and irrevocable trust.
The revocable and irrevocable living trust perform the same function but operate in a slightly different manner. The revocable living trust permit change and flexibility of the trust. You can remove particular assets or change the named beneficiary in the trust. Altogether, a revocable trust can be cancelled or dissolved. Thus, this means that the trust maker retain the power over the trust during his lifetime.
However, the irrevocable living trust cannot be undone. Once the assets has been transferred into trust it cannot be changed. This type of trust is effective in reducing excessive estate taxes. A revocable trust usually turns permanent or irrevocable upon the death of the trust maker.
This trust is created for minor who are yet able to able money. The trust helps to keep the assets for the named beneficiary until they are able to handle them.
Special need trust.
A special need trust is prepared for desired beneficiaries with special need. Funds and assets are placed into this to ensure that the special needs of the individual can be met without also forfeiting their rightful government benefits.
Life insurance trust.
Life insurance trust is an irrevocable type of trust and also a very good way to avoid excessive estate taxes. The trust collects insurances on the grantor and use it for a named beneficiary in the trust.
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