1. A trust is different from a will, in that it allows a person to distribute their worldly goods among their loved ones before their death. It is entirely possible to create a trust as well as leaving a will, or to do one or the other. With good legal advice, you can bequeath your possessions in exactly the way that will avoid being taxed excessively, or just tailor the bequest in the way that you judge most satisfactory.
2. Like a will, a trust can be changed to reflect the state of affairs between the person creating the trust – the testator – and those who will benefit from it – the beneficiaries. Should realities change over the course of the testator’s life, so may the terms of the trust. This allows the testator to ensure that the beneficiaries do not use the terms of the agreement against one another.
3. Setting up a living trust can allow you to avoid your children, dependants or beneficiaries having to go through the system of probate on your property after you die. This is one major reason that people tend to favor a living trust over a will – after all, your family will already be mourning your death – to have to suffer the stress and strain of probate lawyers arguing over your property adds unnecessary extra heartache.
4. It is worth remembering when you are setting up a living trust that you will be required to fund and manage it – or at least delegate trustees to take care of this. This can result in it being an expensive way of doing things. Of course the expense and the overall efficiency of this can depend very much on personal circumstances, so it is far from a “one size fits all” situation. What works for some may not work for others, so it is worth taking some time to look at what way of doing things will work out as being the most efficient.
5. You may create a trust within a will. This allows any of your property to be managed efficiently from the moment your will becomes effective. Although it does not enable the same level of pre death property management as a living trust, this can be achieved by bestowing power of attorney upon an individual in whom you have trust and faith. There can be large savings made in terms of tax if this is done assiduously.
6. A living trust is often favored by testators for the simple reason that it means their financial affairs will not become a matter of public record. In a living trust, everything is managed out of the courts prior to your death, and means that it allows a great deal more privacy, and allows for your memory to be treated with respect and your family protected from intrusion. This is dependent on you placing all those assets that may be worth something into the trust. If you fail to transfer your assets, or to fund the trust, then probate will be applicable and they may well be subject to large taxation.
Disclaimer: This article is for informational and entertainment purposes only, and should not be construed as legal advice on any subject matter.
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