A living trust is a legal instrument which holds title to the personal assets of an individual person or family, including bank accounts, real estate, LLC and stock interests, etc. Like a will, a living trust contains your instructions for the distribution of all your assets after you die. A primary difference between a will and a trust is that a trust avoids probate, whereas a will does not. Probate of a will requires filing of a costly probate proceeding, newspaper publication notices, letters to all heirs even if disinherited and statutory waiting periods. Also, the records of the probate are public information.

Utilizing an attorney prepared living trust is a method of avoiding this expensive, intricate and confusing probate process. When a person's assets are transferred to their living trust during their lifetime, probate is avoided entirely. After the person who established the living trust, who is called the Trustor, dies, the successor trustee(s), who are usually the adult children or relatives of the Trustor, distribute the trust assets to the designated named beneficiaries. Because the living trust eliminates probate and, often under many circumstances, can greatly reduce estate taxes, it is possible to pass on a much greater portion of your assets to your heirs.

It is a very common misconception that holding property in joint tenancy provides probate protections similar to a living trust, however this is not the case. Joint tenancy only avoids probate on the death of the first joint tenant, but the surviving joint tenant will be left with the same probate problem unless planning is implemented after the first death. This is usually not a good time for planning, due to the life changes and emotional stress and trauma associated with the loss of a spouse. In addition, joint tenancy can also cause a loss of the step-up in basis on inherited property, which can cause unnecessary capital gains taxes. In conclusion, the execution and funding of a lawyer prepared living trust, when both spouses are healthy, avoids probate and eliminates the possibility that a surviving joint tenant may be unable to accomplish future estate planning due to incapacity or an accident.

Benefits of a Living Trust:

• Probate is avoided, including multiple state probates if you own property in other states

• Probate entails public court proceedings which can last two years or more; whereas trusts are private and can be administered very quickly, which your heirs and successor trustee(s) will greatly appreciate
• The individual(s) who set up the trust are the trustee(s) during their lifetime and have total control over the trust assets, including the power to easily change or revoke the trust
• The trust for a married couple can be designed to maximize the estate tax exemption, which can result in a potential tax savings to the heirs of more than one million dollars
• The trust will not cause a change in income taxes; tax filings remain exactly the same throughout the life of the Trustor
• The trust can hold corporate stock or ownership interest of an LLC, so that the company and its assets will avoid probate
• Living trusts can be established for individuals, or as a joint trust for married couples, bringing all of your assets together under one plan
• Prevents court control of assets at incapacity or death
• Provides maximum privacy
• Quicker distribution of assets to beneficiaries
• Assets can remain in trust even after your death should you desire
• Can reduce or totally eliminate estate taxes
• Inexpensive, easy to set up and maintain
• Can be changed, modified, or cancelled at any time before the Trustor dies
• Difficult to contest
• Prevents court control of minors' inheritances and guardianship proceedings
• Can protect dependents with special needs
• Prevents unintentional disinheriting and other problems of joint tenancy ownership
• Peace of mind

The author of this article is an LA area estate planning and living trust attorney and is the principal of The Law Offices of Michael K. Elson which provides estate planning attorney services, including LLC formation, incorporations, limited partnerships, family law, and living trusts as part of overall estate planning for investors and their families.
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