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"Put not your trust in money, but put your money in trust." Oliver Wendell Holmes

The Revocable Living Trust has been in existence in the United States for well over 200 years (Patrick Henry is said to have drafted the first).  Until recent years they have been reserved for the wealthy: the Rockefellers, the Kennedys, the Astors.  Even former President George W. Bush has been quoted saying his assets are in a trust.  As a method of estate planning, the living trust is fast becoming the most complete and preferred method for many families today.

What is a Living Trust?

It is simply a unique document which becomes a legal container for all assets, whereby one relinquishes "ownership" of assets transferred into the trust, yet maintains total control over those assets. Whether simple or complex, depending on the circumstances, the living trust works when properly prepared, and when all assets are transferred into the trust.

Parties Involved With A Living Trust

1. Trustor: When you establish a trust, you become what is called the trustor. This is the person or persons that create(s) the trust and own(s) the property placed into the trust. A husband and wife can both be the trustors.
2. Trustee: You will name a trustee to manage the assets in your trust. This can be anyone you wish, including yourself.
3. Successor Trustee(s): This person is the one that will step in after the death of you and your spouse and follow your directions included in the trust. This person is responsible for settling the estate and distributing the assets.  
4. Beneficiaries: In a living trust, you and your spouse are the primary beneficiaries. After one spouse passes away, all the assets simply pass to the surviving spouse. After the death of both the husband and wife, the final beneficiaries will receive the remaining assets. This is usually children however, it can be anyone you like. Many people include a favorite charity foundation, or religious organization.

What Can A Living Trust Do?

• Avoid Probate: Because your living trust holds title to all your property, you actually own nothing in your name so there is nothing to probate. No probate, no probate cost. You can save 10-15% of the value of your total estate simply be establishing a Living Trust.

• Maintains Your Privacy: A living trust is private. When you die, no court will be involved and since it is not public record, no one will be invited to file a claim against the estate or to contest the distribution of your property. If you become incompetent, it will remain a private family affair.

• Almost Impossible To Contest: A living trust can be contested, but not nearly as a will. With a will, anyone can come forward and claim to have right to part of your estate without even having to hire an attorney. Besides, it is very easy to find out about your estate when notices appear in the papers. To contest a living trust, the disgruntled "heir" must file a civil suit. Since the assets are not frozen under a living trust (as they are with a will), the trustee may distribute assets to the intended beneficiaries. This way, each heir must be sued individually, which is expensive and time-consuming.

• Reduces or Eliminates Estate Taxes: Upon the death of the first spouse, you have an unlimited marital deduction. This means that the surviving spouse will not be required to pay any estate taxes. When the surviving spouse dies, the heirs will have an estate tax credit for both the husband and the wife, assuming the estate's value merited the use of an A/B/C trust which was established before the death of either trustor.

• Prenuptial Protection: Structured correctly, a living trust can serve as an immediate prenuptial agreement.

• Protection After Divorce & Remarriage: A living trust is perfect to assist with many of the financial aspects and family dynamics that blended families face.

• Protects Dependents With Special Needs: A living trust can have a special needs provision that will help to maintain care for dependent with special needs (provided there are enough funds to do so).

• You Keep Control: The trust document outlines your instructions for managing your assets and distributing them after your death or if you become incompetent. Even when you can no longer handle your own affairs, you can make sure they are handled the way you want by someone you trust.

• Minimizes Emotional Stress: With all the court restrictions removed, your family can continue with their normal routine much more easily.

• Cost Effective: While a living trust is initially more expensive than a Will, don't forget that the true cost of a Will also includes the cost of probate (10-15% of your gross estate). Make sure to look for an established estate planning firm that offers funding/settlement assistance and free updates.

A living trust is an invaluable tool and once established, they are easy to maintain. Make sure you find a firm that offers funding and settlement assistance along with free lifetime updates to keep your expenses at a minimum.