Charitable Trusts

A living trust is simply a trust you make while you are alive. Living trusts are sometimes referred to as inter vivos trusts. The most common use of living trusts is to avoid probate court when transferring assets to heirs upon death. However, they can have other applications, depending on your financial status and goals.

Property you transfer to a living trust is not subject to probate. The person you appoint as successor trustee, who handles the trust after you pass away, simply transfers ownership to the beneficiaries. The process is much shorter than probate, which can drag on for months and months. In many cases, transfer of living trust assets takes only a few weeks, and there are no legal fees to pay. When all of the assets have been conveyed to the beneficiaries upon your death, the living trust ends.

Avoiding probate is a good thing to do, if possible, as the probate process is long, cumbersome, and expensive. A living trust can allow you to designate property for one or more heirs with the same degree of flexibility as a standard will, without having to put your family through the pain of probate, while still maintaining substantial control over your assets.

Another advantage of living trusts is privacy. Wills are made a matter of public record during the probate process. Living trusts, on the other hand, are never made public. Therefore they can allow you to dispose of your assets without having to worry about unwanted publicity.

Inter vivos trusts may also be used to reduce estate taxes. The standard version used to avoid probate has no effect on taxes, but other types such as AB trusts, exemption trusts, marital bypass trusts, and marital life estate trusts may be created to save on inheritance taxes.

Creating such a trust used to be a cumbersome and expensive process, due to the arcane legal formalities involved, but nowadays the process has been greatly streamlined, to to the growing popularity of this form of estate management. Any lawyer specializing in wills and estates should be able to handle creating one at a reasonable cost.

Lastly, a living trust may have one or more charities as beneficiaries, in addition to or in lieu of individuals. This has a couple of advantages over simple will bequests. First, as with your heirs, it allows your gift to go to charity without passing through probate. Second, it gives you the option of keeping your gift private, should you choose.

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