Besides wills, trusts can also be part of an estate plan to control assets. Without a will or trust, a person’s assets will get divided according to Arizona state law after they pass away. One popular type of trust is the living trust, which has many benefits.
Overview of a living trust
In estate law, trusts commonly involve three parties: the grantor or trust creator, the beneficiary and the trustee. A living trust, sometimes called a revocable trust, is a legal document created during the life of the grantor to hold assets.
Sometimes, a grantor may act as the trustee and appoint a co-trustee to take over if they become incapacitated. A grantor retains ownership of the assets, and they can alter the trust at any time. A trust has the benefit of avoiding lengthy probate court, which is required with wills.
When grantors may need a living trust
Living trusts could benefit grantors who have many assets or assets in another state. In addition, a living trust commonly benefits blended families and couples who don’t plan to marry because it leaves them assets in a way that state law wouldn’t. A living trust can also help a grantor assign the guardianship of minor children.
If the grantor has grown children who are irresponsible with money, the grantor can set the trust to give them funds as needed. If an adult child marries, the trust protects assets from going to the ex-spouse.
A living trust is rarely needed for younger people in good health and with modest means. For grantors under 55 with few assets, a will may suffice in transferring assets, and it costs less than a trust. However, even a healthy, young business owner could benefit from a living trust to keep the business out of probate if they were to die unexpectedly.
Trusts make great estate planning tools regardless of a person’s wealth. There are many types of trusts for the grantor to consider based on their needs and lifestyle.