No doubt you’ve heard a lot about living trusts. While the concept makes intuitive sense, oftentimes, living trusts can be bewildering and overwhelming. Whether or not a living trust should be a part of your estate plans is an individual matter, best worked out with your advisors and family members. Here are some common questions that may help explain why both living trusts and wills are important.
What is a living trust?
A living trust is a legal entity that can own property, similar to a person. However, a living trust holds its property on behalf of a “beneficiary” and is managed by a “trustee” who must follow instructions set out in the “trust agreement.” The trustee does not personally own the trust’s property and must make decisions in the best interest of the beneficiary.
Why create a living trust?
Prior to creating your living trust, you owned your personal property and administered it for yourself. But afterwards, your living trust owns the property and you, as trustee, administer it for your benefit. A significant advantage of a living trust is the ability to name a successor trustee who can step in and manage the trust.
What is the benefit?
The opportunity to appoint a successor trustee is advantageous when it comes time to distribute your assets at the end of your life or if you should become incapacitated. During your lifetime, if circumstances arise making it unwise or impossible for you to continue to manage your financial affairs, your living trust ensures that a successor trustee can take over those responsibilities.
What does a will accomplish?
Your will sets forth how you want your final affairs to be wrapped up. Your will is subject to a court supervised process called “probate” which can be time consuming, expensive and is open to public scrutiny. However, if you have a living trust, your successor trustee can distribute your money and property avoiding the delay and expense of a court probate.
If I have a living trust, do I need a will too?
Yes, a living trust does not eliminate the need for a will. It may be unwise or impossible to transfer certain property to your living trust. You will still need a will to distribute these assets.
Can either a living trust or will reduce my estate taxes?
No, neither a living trust nor a will avoids or reduces your estate tax. Your estate has to pay taxes regardless of whether your assets are in a living trust or pass by will. However, a gift to charity in either document, might reduce your estate tax.
Can a gift in my will or living trust qualify for the Mass General Legacy Legacy Challenge?
Yes! Just fill out the notification form or call our office at 617.643.2220.
Consult your own advisors to determine whether a living trust is right for you. And remember, you can include a legacy gift for Mass General in your living trust or will.
The Mass General Legacy Challenge
For more information about how you can join the Mass General Legacy Challenge, or if you would like to discuss additional planning ideas, contact us today at firstname.lastname@example.org or 617.643.2220.