I know what you are thinking, "Why this guy talking about trusts on injuryboard.com, this is a site about safety and helping those who are, duh, injured?"
Well, as we all know, the person who is physically injured is never the only one hurt. We know that family members, loved ones, and even collegues suffer when a person is going through a tough time. Unfortunately, the most catestrophic of all injuries, those that lead to incapacity or death, can leave our loved ones in a financial and legal mess during a time when they are at their most vunerable. We do not have to look very far to find stories of family members and friends who are seeking justice for their loved one while, at the same time, trying to sort through the expensive, restrictive, and time cosuming jungle that is probate court. However, much of this unnecessary suffering can be avoided with the use of a living trust.
Contrary to what many believe, trusts are not just a tool used by the rich to make sure their loved one’s will not have to work for a living. When we use the term "living trust" we mean a document that acts as a will substitute. It does the same thing as a will, but without the downside of the process. All wills must go through probate. Which means that, if you have a will, your loved ones will incurr the time and expence of a court proceedings. However, a living trust (also called a revocable trust) avoids the time and expence of probate and allows your loved ones access to your assets immediately, should you pass away or become incapacitated.
A living trust is a written declaration and contract in which you state that you (as "grantor") are transferring your property into living trust for the benefit of yourself during your lifetime (lifetime "beneficiary") and then for the benefit of your heirs (remainder "beneficiaries"). You will be the "trustee" of your living trust, which means that during your lifetime, you will have complete control over the living trust’s assets. The "successor trustee" you name will take control over your living trust in case of your death or incapacity. In addition, you will have the power to change, amend or revoke your living trust at any time during your lifetime.
There are two main advantages to a living trust vs. a will:
1. Avoidance of Probate
The main advantage for a living trust is the avoidance of probate. Probate is a state court proceeding in which your property is transferred to your heirs. All Wills must be probated. Since probate only affects assets, which you own at the time of your death, assets placed in a living trust are not owned by you, therefore, there is no probate on those assets. Probate will generally cost about 3-4% of the value of the probate assets and will take between 9 months to 2 years (absent litigation or contested claims) to complete.
2. Confidentiality and Continuance of Ownership
Since probate is a court proceeding, your Will and the valuation of your assets are open to public inspection. A living trust, however, is confidential and the transfer of assets from the living trust is kept from public view. When the grantor of a living trust dies or becomes incapacitated, the successor trustee continues the administration of the living trust. There is no "gap" period between the time of death and the appointment of the executor, which occurs under a Will. Also, the continuity of the living trust is preserved if the grantor becomes incapacitated through illness or accident through the successor trustee. In this case, the living trust would be administered for the benefit of the grantor. This is especially important for someone who is injured in an accident and becomes incapacitated. The trust allows the person you named to step in and use your assets for your benefit.
By having a living trust, you protect your loved one’s should you be the victim of an unfortunate injury that leaves you incapacitated. While protecting ourselves is important, our goal should also be to protect our loved ones when we can.