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Why would you put your house in a trust? There are many reasons to have a trust. Trust is a verified and legal document that you can create in your lifetime. It is a process in which you grant all control of your property and assets’ to anyone according to your requirements. It can also be created by a will and formed after death according to specific requirements. A living trust is the best estate planning technique. You can save time and money by following this technique. For example, you can avoid probate which is a very costly and lengthy process.
Although family trust or living trust is the best technique, you should have an idea about the cost of setting up a trust and reasons to have a trust. You should know about different types of trust and the advantages and disadvantages of trust. In this article, you will learn about family trust, different types of trust, and the advantages of a trust.
Common parties in a trust
There are many types of trusts, but most people follow a three-party ownership system in which one party gives the rights and controls to hold property to another party while one party prepares necessary documents for the completion of the process.
- Trustor or grantor
This is the person who creates a trust and transfers property. He grants the control of this property to another person or party. A trustor may be a single person or more people depend on the condition. He is also known as donor or settlor. He is the most important party in trust.
This party or person is responsible to manage the trust. Trustee must have to prepare all the important and legal documents for trust. They are responsible to manage and control the property or assets. In some cases, the grantor is also the trustee of the trust but it depends on conditions.
This party or person receives all the benefits of the trust. They have complete control over the property or assets according to terms and conditions of the trust. There are many types of beneficiaries depending on the specific condition. Primary, contingent, and the remainder beneficiary are the common types of beneficiaries.
Different types of trusts
Why would you put your house in a trust and what are the benefits of having a trust? Although trust has many advantages and the basic structure of trust remains the same in many cases. There are many types of trust with different purposes and needs but generally, people follow the following types of trust.
There are different types of trust which people follow on different occasions according to their specific needs and requirements. A revocable trust is the most common type of trust and it is the best example of a family trust. This is also known as living trust because it allows you to control your assets during your lifetime. You can change or modify anything according to your needs in your property.
Many people prefer revocable trust because revocable trusts are not subject to probate. You don’t have to visit the court for the process and in this way you can save your time and money as well. Furthermore, this type of trust is very secure and easy to follow. In most cases, all three parties are the same person who can manage their property but will be given over to other parties like trustee or beneficiaries after the death of a grantor or trustor.
An irrevocable trust, you cannot change or modify anything once you establish it. You can’t modify it in your life and nobody can change if after your death. This is considered one of the best ways to transfer assets from one generation to another. We can say that irrevocable trust acts as a safeguard of property because nobody can change or alter when it established. People prefer irrevocable trust because this is more tax efficient.
It is also known as a payable-on-death. You can save money in a bank and the money will be transferred to the named beneficiary of the account after your death. Totten trust is the best option to avoid the probate process. Totten trusts are widely used these days. You just have to open an account in a bank and provide the name of the beneficiary for the bank record. After your death bank will transfer the entire amount to the specific person. One thing should be kept in mind that the beneficiary can’t withdraw money until you alive.
This is a type of living trust in which the grantor and beneficiary have no control over the property or assets. People prefer this type of trust to avoid any conflict between trustee and beneficiary. It can be revocable or irrevocable depends on specific conditions. The main purpose of blind trust is to eliminate any conflict of interest. As a grantor, you can choose any type of trust according to your needs and requirements.
Funded or unfunded trust
Why would you put your house in a trust or what are the benefits of a trust? You should have an idea about all these types of questions. Funded or unfunded trusts either have funds put into them or not and therefore known as funded or unfunded trust. As a trustor, you should choose the best type of trust according to the situation.
Why would you put your house in a trust? advantages of a living trust
Trusts are often used to manage property or assets professionally. How much does it cost to put your house in a trust? And what are the advantage and disadvantages of trust? Of course, a living trust has many advantages and the main advantage is it avoids probate. Probate is a court process of distributing assets or property. Sometimes it becomes very lengthy and costly and therefore people prefer to trust to save their time and money. It also provides better value and security to your property or assets. It is a private process and you don’t need to pay heavy taxes for the completion of the process. If somebody asks you about why would you put your house in a trust? You can explain the benefits and advantages of a living trust.
Being human, we always take care of our property or assets and there are many reasons to have trust. We can save time and money by choosing the right type of trust. We can also avoid lengthy and costly probate. A living trust is the best technique to protect your property or assets. So, we should choose the right type of trust according to the condition to save our time and money.