A living trust is an estate planning document that many Wakefield residents use to place their assets into a trust for their own benefit while they are still alive. Upon a trustee's death, or should a trustee become disabled, the assets within the trust transfer to his or her beneficiaries. The purposes of a trust are many, but the main reason that individuals opt to use trusts instead of wills is to avoid probate and all its costs.
According to Bankrate, trustee fees typically only amount to about one percent of total asset value. Compare that to a state's executor fee schedule, which typically looks something like the following:
- 5 percent on the first $100,000 in assets
- 4 percent on assets totaling $100,000 to $200,000
- 3 percent on assets totaling $200,000 to $700,000
- 2.5 percent on assets of up to $4 million
Many people want to know if they should put their homes in a trust. According to Realtor.com, the answer is a resounding yes. There is no point in having a trust unless one plans to fund it with assets. A home is typically a person's greatest asset, making the family home the primary big-ticket item.
If one owns a vacation home out of state, it is especially important that he or she places all real estate in a trust. Doing so can help avoid separate probate proceedings in each respective state and therefore, avoid the high cost of multiple proceedings.
Revocable or irrevocable trust: Which is best?
In addition to deciding which assets to protect with a trust, the creator of a trust must also decide which type of trust to form: a revocable or irrevocable document. A revocable document allows the trustee to maintain full control of his or her assets right up until the day when he or she is no longer able to make decisions. With this type of document, the trustee can add and change assets at will, or even dissolve the trust entirely. That said, a revocable trust offers little to no tax benefits.
An irrevocable trust, on the other hand, is one that, once created, the trustee cannot revise or dissolve. This might seem like a detriment, but to someone who is certain about which items he or she wants to protect, it could be the best option. Unlike a revocable trust, an irrevocable trust is not subject to estate taxes.