Creating a living trust is an excellent way to keep your assets safe during your lifetime, and also protect them from probate after you die. If you do not have a trust, your estate will have to go through a lengthy probate process. With a living trust, you will have a trustee who will oversee your property after you pass away. Then, the trust will direct the distribution of the assets to the people you have designated as beneficiaries. You can include anything in a trust, from real estate to stocks.
When you create a living trust, you will want to transfer as many of your assets as possible to the trust. The amount you need depends on the nature of the assets you are transferring. If you have a lot of money, you might consider transferring it to a trust, so you can leave it to your family when you pass on. However, you should not transfer retirement accounts into a living trust. This will likely trigger income tax, and you would have to withdraw the funds.
Once you have transferred your assets to the trust, you should have an attorney help you to set up the trust. There are many different types of trusts, including revocable and irrevocable living trusts. A revocable trust can be dissolved while you are still alive, or you can change the terms of the trust anytime during your lifetime. If you decide to leave assets to your heirs, you can also add a clause naming a beneficiary.
A trust fund is a separate document that determines how your assets will be distributed to your heirs. You can distribute your assets as a lump sum, as installments, or as physical items. You can also name a primary and secondary beneficiary. You can include health savings accounts in your trust. This can allow your heirs to receive tax-free medical expenses.
When distributing your assets, you can use a trust fund to speed up the distribution process. Your heirs will not have to go through the lengthy probate process. You can also customize your trust fund by adding age attainment provisions. You can also include a clause stating how you want your assets used. You can include charitable distributions in your trust. If you have a disabled child, you can include a clause naming a disabled child as a beneficiary. This can be a sensitive issue when it comes to inheritances. If the beneficiary is disabled, it may disqualify them from certain government benefits.
Some states have a homestead exemption, which allows you to avoid paying taxes on the value of your home. If you live in a state that has a homestead exemption, you should not eliminate that protection by transferring your home into a trust. You should consult an attorney about the specifics of your state's laws. You can contact your state's Attorney General's office for more information.
Depending on your state's laws, you may be required to file a gift tax form. If you plan to give more than $13,000 to a single person per year, you should also fill out a federal unified credit gift tax form. You will not be able to use that federal unified credit for estate taxes when you settle your estate.