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How Does a Living Trust Work?

by Jeffrey Asher, Estate Planning Expert
May 05, 2017

Question: How does a Living Trust work?

Answer: While you are alive and well, you are the trustee and the beneficiary of your Living Trust.  After your Living Trust is created, your assets should be retitled from your name to the name of your Living Trust.  This is a necessary step to ensure (a) that your Living Trust actually governs your assets and (b) that your assets will not have to go through probate.  If you don’t retitle your assets into the name of your Living Trust, then your Will must be probated or your estate (if you don’t have a Will) must be administered.  Either way, if you don’t retitle your assets into your Living Trust, your family will have to file papers in court to handle your estate.  This is especially helpful when you own real estate in more than one state, which necessitates a probate in each of those states.
 
Your Living Trust can also be set up to receive your estate assets such as your life insurance proceeds and your death benefits from your retirement accounts.
 
While you are alive and well (meaning you are not suffering from a mental disability), you are in full control of the assets in the Living Trust.  You can revise or revoke your Living Trust at any time.  Your Living Trust does not have to file a tax return or pay any income taxes.  It is disregarded for tax purposes.
 
At Your Passing.
 
At your passing, assets in your Living Trust are distributed to your loved ones according to the directions contained in the Living Trust agreement.

Jeffrey Asher is a prominent Trusts & Estates and Elder Law attorney in Westchester County and New York City. Mr. Asher concentrates primarily in the areas of Estate Planning, Probate and Estate Administration, Elder Law, Medicaid Planning, and Special Needs Planning. Mr. Asher provides comprehensive legal services, tailored to meet your specific needs.

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