Living Trust Law

The living trust law was introduced as a form of legislation by the US Congress way back in the early nineteen eighties. At the outset, not many members of the public were aware of the tremendous advantages this new law would bring. It is probably only in the last decade, and largely due to information passed over the internet, have the public begun to take the few relatively minor steps to establish a living trust. By doing so they have not only ensured that they have ensured the control of their assets whilst they are still active, they have also gone a very long way to protect the interests of their loved ones after they pass away.

Establishing a living trust can take just a few hours, and the entire procedure can be carried out within a limited time frame. The first step is to prepare an accurate itinerary of the assets to be included in the trust. Armed with this itinerary, the trustee then either approaches a lawyer to prepare the trust. The trustees may even choose to do this themselves, in the event that there estate is fairly straightforward and/or not of high valued. Once the necessary living trust documentation has been completed, then in every event, it needs to be registered by a Notary public to become legally binding.

As laid out by law, there are in fact two forms of living trust. Either a revocable living trust or an irrevocable living trust. These two forms of trust share some common factors. One that they can be established while the trustee is still alive and secondly, and no less important, that by establishing a living trust, the trustee completely precludes the necessity for their estate be settled by probate in an open court. This procedure has been going on for many years, and has only cost the beneficiaries money, helped to make lawyers wealthy and wasted tens of thousands of hours of the court's time.

The most popular form of living trust is the revocable version. The reason for this is simply because it is possible for the trustees to retain complete control of the assets of funds, almost till the pass away. This is a friendlier and more human way of handling the trust, but not without its complications. The trustee can remove assets from the trust; change the name of the beneficiaries on a whim and all the other combinations that Hollywood movies are made of.

However what can be changed is that as soon as the trustee passes on, the estate is wound up in the exact condition it was opened on that very day. Any of the trustee's assets not registered within the trust were liable for inheritance tax and would be subject to probate, and all that that entails for the beneficiaries of the estate. This does happen, and usually fairly rarely. If on the other hand the trustee becomes incapacitated then a substitute trustee will be called in. Usually a lawyer, bank official or close and capable family friend will take over the running of the estate till the trustee or trustees pass on.

The other less widely used version of living trust is an irrevocable living trust. As it sounds, it means that once the trust has been established, it cannot be changed and can only be opened once the trustee passes on. All though there are a lot less of these funds around, they are generally of a much higher value, and the living trust law particularly protect the assets held within the trust.

Whatever version of living trust opted for, there can be no doubt that the introduction of a living trust law has proven to be a humane and thoughtful act by the US Congress allowing people to retain many assets such as a family home without having to pay often penury estate taxes.