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It is called a Living Trust because it is created during the grantor’s lifetime and takes effect during the grantor's lifetime. By contrast, a Will does not take effect until after death.
For a Living Trust to take effect, title to the grantor's assets must be transferred into the Trust. Title to bank accounts, stock certificates and/or real estate owned by the grantor must be transferred into the Trust. Creating a Living Trust alone will not cause the Trust to become funded. The Trust would be an empty "shell" until assets are transferred into the Trust.
Perhaps the biggest advantage of a Living Trust is that it does not have to go through probate. However, a Will must go through the probate court procedures.
If you die without a Will or Trust, the state government determines who will inherit your assets. This determination of who inherits your assets is referred to as the intestacy statute for each state.
Probate is the court procedure used to change the legal ownership of assets from the name of an individual who has passed away into the name of the living heirs or beneficiaries. It is also the process where creditors of a decedent file claims to collect their debts and where interested parties who have a complaint regarding the deceased can file their complaint (a will contest). Even without a contest, probate can be costly and time-consuming and is a proceeding open to the public.
Probate can be avoided with careful planning. There are a number of different techniques for doing so which can be used alone or in combination with each other.
When property is held in joint tenancy with rights of survivorship by two or more people, upon the death of one of the owners, all of his or her interest in the property is transferred immediately to the surviving owners.
This depends upon what the Power of Attorney says. It can be made effective at the time of signing or it can become effective at the time of your incapacity.
If you have minor children, the Pour Over Will is used to name a guardian for your minor children. Also, it protects against intestacy in the event any assets have not been transferred into the Trust at the death of the Trustee / Grantor. Its function is to "pour" any assets left out of the Trust into it so they are ultimately distributed according to the terms of the Trust.
An actual change to the terms of a Trust is called an "Amendment to the Trust". An example would be changing the distribution from two children to just one child. A Trust can also be changed by a total "Restatement of the Trust" if multiple changes are involved.
A Quitclaim Deed is used to transfer whatever interest or title a grantor may have in property, without providing a warranty as to full title in the property. Quitclaim Deeds are frequently used in simple transfers of real property.
A Warranty Deed fully warrants good clear title to the property, free from any encumbrances that are not listed on the deed. It is used in most real estate sale transactions.
A reverse mortgage is a loan available to home owners of retirement age that allows them to borrow a portion of their home equity. The home owners can elect to receive a lump sum payment or a line of credit that they can withdraw when needed. The home owner is under no obligation to make payments, but is free to do so with no prepayment penalties depending on the program.
The loan comes due when the homeowner/borrower dies or sells the house, or moves out of the house for more than 12 consecutive months. Once the loan comes due, the borrower or heirs of the estate have an option to refinance the home and keep it, sell the home over to the lender.
If the heirs decided to sell the house, a proper estate plan is necessary for a smooth transaction to minimize the cost and maximize the gain.
Please research pros and cons about the reverse mortgage equity loan for your unique situation.