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When it comes to estate planning, many people make a will to distribute their assets after they pass away. But there’s another aspect of estate planning that can offer unique benefits to you and your family: a trust.

What Should Be Included In A Living Trust

What Should Be Included In A Living Trust

A trust is a legal contract, drafted by a lawyer, with a named trustee that ensures your assets are managed according to your wishes during your lifetime and after your death.

When Is A Living Trust A Good Estate Planning Tool?

While assets controlled by your will must go through probate to be verified and distributed according to your wishes, trust assets usually do not. A will becomes part of the public record, while a trust agreement remains private. When you establish a trust during your lifetime, you only need to deal with your attorney and your executor to execute the agreement. It should be noted that you can also stipulate in your will that you want to create a trust upon your death; in this case, your estate will go through probate before the trust is established.

Privacy is important if you want to keep your family’s financial affairs out of the public eye. Plus, by avoiding the probate process, trusts are often a faster and simpler way to distribute your assets when you die. You can also decide to state in your will that any assets held outside the existing trust at the time of your death will be transferred to the trust when you pass away. When you’re dealing with the death of a loved one – or the transfer of assets from one person to another – you probably want the transition to be as smooth and private as possible. Creating a trust can help you achieve both goals.

Trusts are either revocable or irrevocable, meaning they can be changed after they are created – or not. A revocable trust gives you the option to make changes to it after it’s signed, but, depending on its terms, this may or may not lead to tax advantages down the line.

An irrevocable trust, however, is one that you cannot usually change after the agreement is signed. Because you transfer assets from your estate, there may be transfer tax benefits with an irrevocable trust. Contributions to the trust are generally subject to gift tax requirements during your lifetime. However, if certain conditions are met, assets placed in this type of trust (and appreciation of those assets over time) can be saved from estate tax after your death.

Should You Have Both A Will And A Living Trust?

In addition to the initial funding, you can make an annual exclusion gift to an irrevocable trust each year without having to pay additional gift tax on that contribution. The 2023 gift tax exemption rate is $17,000 for individuals or $34,000 for married couples filing a joint return. Talk to your trust administrator and attorney about whether a revocable trust and/or an irrevocable trust might be a good estate planning option for you and your family.

Whether you establish a trust under your will and/or create a separate trust agreement during your lifetime, trusts give you the ability to truly customize your estate plan. You can include conditions such as age-attainment provisions or parameters for how the assets will be used. For example, you can say that you want the money in a trust to be given to your grandchildren once they turn 18 and to be used only for college tuition. Or you may decide to limit how much money the beneficiary can receive from the trust each year if they are someone who may need extra help with money management.

A trust is a plan to take care of the people you love when you are gone or unable to help them.

What Should Be Included In A Living Trust

Your trust administrator can help you discuss various possibilities and scenarios before your attorney drafts the actual trust document for your trust.

What Is A Living Trust?

Wills only come into effect when a person passes away, but a revocable trust established during your lifetime can also help your family if you become ill or become unable to manage your assets. If that happens, your trustee can make distributions on your behalf, pay bills and even file tax returns for you. You can choose in advance who will be appointed (through the trust) to manage the assets.

While no one likes to think about these situations, making provisions like these can protect your family from making decisions without knowing your wishes during difficult times.

If you choose to create a revocable trust, you can change the terms of the trust agreement at any time by making an amendment to the document. It allows you to be adaptable and flexible to changing life circumstances. Perhaps down the line you will become involved in a charitable cause that you are passionate about. Or maybe you have a new grandchild you want to write into the trust. If so, you can add them as future beneficiaries to your trust at that time.

So there you have it. When you create a trust, you are setting up a plan to take care of the people you love when you are no longer or lack the capacity to help them. Not only can a trust simplify the asset distribution process, it can also help you leave a lasting financial legacy.

What Doesn’t Belong In A Trust?

A trust requires careful administration, but setting one up is a fairly simple process that usually involves five steps.

Not a deposit ● Not FDIC insured ● May lose value ● Not bank guaranteed ● Not insured by any federal government agency.

The U.S. Bank and its representatives do not provide tax or legal advice. Your tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information regarding your particular situation.

What Should Be Included In A Living Trust

The information provided represents the opinion of the U.S. Bank and is not intended to be a prediction of future events or a guarantee of future results. It is not intended to provide specific investment advice and should not be construed as an offer of securities or a recommendation to invest. Not for use as the primary basis of investment decisions. Should not be interpreted to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult their investment professional for advice regarding their particular situation.

Why You Should Consider A Living Trust

The U.S. does not offer Bank of insurance products but may refer you to an affiliated or third party insurance provider.

The U.S. Bank is not responsible for and does not guarantee U.S. products, services or performance. Bancorp Investments, Inc.

Equal Housing Lenders. Deposit products are offered by the U.S. Bank National Association. Member of the FDIC. Mortgage, Home Equity and Credit products are offered by the U.S. Bank National Association. Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. A living trust is a legal arrangement established by an individual (the grantor) during their lifetime to protect their assets and direct their distribution after the grantor’s death.

It is an estate planning tool that can help family members and beneficiaries avoid a long, public, complicated, and sometimes costly, probate process.

Should You Move Your Trust To Another State?

A living trust takes the form of a legal document. The document lays out the terms of the trust and the assets the grantor assigns to it. A trustee is appointed by the grantor as the individual (or entity) who, at a certain point, will control those assets for the benefit of the beneficiaries.

Living trusts are important because they allow a trustee to manage the assets in the trust and transfer them to beneficiaries after the grantor’s death.

They begin by establishing a trust instrument during the life of the grantor. It is a legal document that lays out the rules and provisions of the trust. Because of their importance and potential complexity, those setting up a living trust often work with experienced estate planning professionals to ensure proper setup.

What Should Be Included In A Living Trust

Once the living trust is created, the grantor decides what assets should be in it and then transfers title to those assets to the trust.

What Should Not Be Included In A Living Trust?

Living trusts are managed by a trustee who generally has a duty to administer the trust prudently and in the best interests of the trust’s beneficiaries. Beneficiaries are designated by the grantor when they create a living trust.

Upon the grantor’s death, these assets flow to the beneficiaries according to the grantor’s wishes as outlined in the trust agreement.

A living trust itself can be named the beneficiary of certain assets that would otherwise flow directly to the named beneficiary (regardless of what is stated in a will).

Unlike a will, a living trust takes effect during the grantor’s lifetime. The trust does not have to go through probate for the assets to reach the intended beneficiaries when the grantors become incapacitated.

An Introduction To Trusts — Alpha Wealth Advisors, Llc

Assets must be assigned to a living trust that will cover it

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