Answer: Though a living trust can be used for a range of reasons, many people use them in order to avoid the complicated legal process known as probate. When you die and leave behind property, that property has to go through probate before new owners can take possession of it. With a living trust you transfer your property to the trust to own. This way, when you die, the property isn’t legally yours so it doesn’t have to go through probate.
Question 2: Will a living trust help me avoid estate taxes?
Answer: Maybe. While married couples can create living trusts to take advantage of estate tax exemptions, you must create more than one trust and structure them properly. However, recent and forthcoming estate tax changes may alter this, and single people do not generally save on taxes by creating a living trust.
Question 3: What does “revocable” mean?
Answer: When you create a living trust you retain the right to modify its terms or completely cancel the trust whenever you see fit. This is different than some other kinds of trusts that are non-revocable, such as those you create through the terms of your will. Non-revocable trusts also have their positives and negatives. It’s best to talk to your attorney for in-depth advice about how any trusts operates and what risks and benefits are involved.