A Living Trust is an agreement between you (the Settlor or Trustor) and an individual or entity (the Trustee) made during your lifetime. The trust agreement determines how assets placed in the Trust will be managed and distributed. Trusts can be Revocable or Irrevocable.
A Revocable Living Trust can provide various benefits to meet lifetime purposes:
- A trust provides for the management of your assets during your lifetime and names someone to assume responsibility for them if you become disabled.
- You determine how your assets are to be managed by providing written instructions in the trust.
- Your estate avoids the expenses and fees of probate upon your death because the trust contains instructions for the distribution of your assets after without court proceedings.
- With special planning, a trust can help lower or avoid estate taxes, as well as allow you to set special provisions for minor or disabled children.
- Revocable Trusts are subject to amendment or termination according to the terms of the trust agreement.
An Irrevocable Trust can provide substantial estate tax savings or shelter assets from the uninsured medical expenses of long term care such as the costs of a nursing home. Such trusts require careful planning.
Irrevocable Trusts, cannot be changed or cancelled and have special tax treatment.