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Lombard living trusts attorneyWhen you are beginning to prepare an estate plan, it is important to remember that you are not just planning for the time after your death. An estate plan is necessary for more than just the rich—though that designation can be quite misleading. An estate plan is an outline set up by anyone—including those in lower- and middle-class income sectors—that determines what will happen to one’s assets and property. For those who may tend toward the higher end of the socioeconomic spectrum, it may be in your best interest to establish a living trust, which is a tool that can be used to manage your assets while you are still alive. Among other benefits, living trusts can useful in protecting certain assets and maintaining eligibility for government financial aid programs such as Medicare and Medicaid.

Two Types of Living Trusts

There are two main types of living trusts: irrevocable and revocable. The vast majority of living trusts are revocable, meaning that they can be amended or revoked at any time by the creator. When you create a living trust, the assets you select are transferred to the trust and ownership is in the trust’s name rather than in the name of an individual. Your designated trustee then administers the trust, meaning that the trustee makes decisions for the leveraging, sale, or gift of any assets in the trust. Most people name themselves the trustee of their own living trusts, meaning that there is essentially no difference in the way that one administers his or her own assets—only that they are now technically owned under the umbrella of the trust.

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Lombard estate planning lawyerFor many people, the first time they hear the word “trust” in relationship to financial matters is when it is used—often disparagingly—to describe a child of extremely wealthy parents. In the eyes of some working-class people, these “trust-fund kids” have things pretty easy, which may, in turn, lead to a negative connotation for the idea of a trust. Trusts, however, are extremely valuable tools with a wide variety of economic applications. When a trust, like a revocable living trust, is used in estate planning, it can dramatically ease the process of distributing the decedent’s property to his or her chosen beneficiaries.

What is a Trust?

A trust, put simply, as an arrangement that places assets and property under the care of a particular person, entity, or other third-party to be distributed to beneficiaries at some point in the future. The party responsible for managing the trust is known as the trustee and should be chosen with great care. There are many potential advantages to using a trust in place of or in addition to a traditional last will and testament.

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