Living Trusts, Asset Protection, and Other Issues

Commonly Asked QuestionsAnd Answers

Living Trusts

What is a living trust?Also known as an inter vivos trust, a revocable living trust is a legal entity. Even though it doesn’t exist outside of a piece of paper, the law allows it to own property.

Creation

How do I make a revocable living trust?You sit down with your estate planning attorney and draft a document called a trust instrument. The trust instrument has to contain specific details as required by law.

Trust Operation and Management

What does my trust do?Your living trust can own any of the property you transfer to it. When you create the trust, you will have to decide who can use that property, who must manage it, and who inherits after you die.

Trustee

Who will manage the trust?You have to appoint a trustee to manage your revocable living trust. This trustee can be almost anybody, but it’s usually you.

Beneficiaries

Who gets to use the living trust property?You do. In addition to creating the revocable living trust, and serving as the trustee, you will also retain the benefits of being able to use and control your property.

Asset Protection

Will my living trust help me avoid taxes or other risks?No. Revocable living trusts do not give you any tax benefits, nor do they protect your property from lawsuits or other potential risks. If asset protection is important you, you need tools other than a living trust.

Other Asset Protection Tools

What other tools are available for asset protection?That depends on your circumstances, but these tools often include different types of trusts, known as irrevocable trusts, as well as different types of business structures, such as limited liability companies.