Irrevocable Living Trust

When people get married and start a family, the priorities of their lives change forever. They spend so much more of their time and their money taking care of their loved ones sometimes at the expense of their free time and the indulgences of life that they once enjoyed, such as an occasional vacation, a visit to a movie theater, or enjoy a good meal at their favorite restaurant. Instead their priorities increasingly lie in the nurture and protection of the family, keeping them in a safe and comfortable environment, and doing as much as you reasonably can to secure their education and their future.

Then before you know it, they start to spread wings and leave the nest you have provided for them. Only natural, you say to yourself as you start to drop down a gear or two and start to look forward to the retirement years that are looming up before you. To see a little more of the world, enjoy yourself and spend time with your children and your grandchildren that will just be starting to arrive into the World. All of a sudden a nagging guilt strikes you; "What about my family? Is it fair that I spend all my money now? Why can't I leave something behind for them when I am gone?"

The fact is, with advantages of modern medicine, people now live longer, healthier, and fuller lives. Many now realize that unless they do something, they will see whatever capital and assets that they have accumulated during their working years gradually be worn down and they will have nothing significant to leave behind for their loved ones except memories.

These fears are entirely unfounded and avoidable, because by taking advantage of proper estate planning, they can establish what is known as an "irrevocable living trust". By doing so they will overcome the necessity to pay estate tax and leave a major share of their capital intact for their loved ones to enjoy after they have passed on.

Establishing an irrevocable living trust involves relinquishing complete control of a pre-determined section of the estate to an independent trustee, in most cases a close personal friend, the family lawyer of an officer of the bank that you work with. The trustee's role is to use his judgment to manage the assets for the beneficiaries of the trust and to protect its assets at any cost.

Once established, an irrevocable living trust may not be altered or terminated by the trustor. Any profits made by the trust remain with it, and can only be allocated once the trustor or trustors pass away and the estate dispersed.

Another principal advantage for establishing a living trust is the avoidance of probate. The significance of a probate is where a state court proceeding allows any property in the state to be dispersed to heirs. Under law, all wills must be probated. A living trust is confidential and the transfer of assets from the living trust is kept from public view.

However the advantage of establishing a living trust means that probate can only affects assets owned at time of death, any assets placed in a living trust are not deemed to be owned by the person who has passed on. In this case, there is no probate on those assets. This is a cost saving exercise in itself, as probate will generally cost between four to eight percent of the value of the probate assets. Also it can take as long as two years to complete.