Living Trusts
One of the best ways to make sure your family will be protected after you’re gone is by setting up a trust. Most people think trusts are expensive and complex, reserved for the wealthy elite, but they don’t have to be. In reality, the size of a person’s estate has little to do with whether they could benefit from a revocable trust. There are many types of trusts, each designed to achieve different goals. At its most basic, a trust is a legal document designating someone (including yourself!) to be responsible for managing your financial assets and establishing beneficiaries of trust assets.
One of the most popular trusts is called a revocable living trust. When you create a living trust and transfer your assets to it, you can still use, manage and even sell them, but your name is no longer on the title. In other words, you don’t legally own them, but you control them just like you did before the trust. Unlike a Will, which only takes effect when you die, a trust also controls your property while you are alive, but become incapacitated. So, if you put your property in the trust and then become legally incapacitated or die, you don’t own any assets for the probate court to control. Instead, the person that you named as successor trustee in your trust document can seamlessly step in and manage those assets for you or your chosen beneficiaries. This avoids probating your estate if you die, and avoids your children having to petition the court for guardianship over you if you are incapacitated. This results in a quicker, more efficient administration of your affairs, and makes it easier for those left behind.
Trusts have other benefits. They are easy to change, or revoke altogether. If you have children who are minors, or are not responsible enough to manage their inheritance, the trust can hold onto their money, with the trustee distributing it as needed, until they are mature enough to manage their inheritance without supervision. Also, unlike Wills, which are filed with the probate court, and therefore public records, trusts are private. They aren’t normally exposed to public record, so your confidential information is not exposed to prying eyes.
Frequently Asked Questions
- Is a Living Trust better than a Will?
- A Living Trust offers several advantages over a Will. It avoids probate, which can be time-consuming and costly in New Hampshire. It also provides greater privacy, as a will becomes a part of public record, while a trust agreement stays private. A Will only takes effect when you die, whereas a Trust can help manage assets in case of incapacity, as well as distribute them after death. A Trust also helps you customize your estate plan. A Will gives your beneficiaries their inheritance immediately, no matter how young or immature they are. With a Trust, you can include conditions on how and when they receive the money.
- Do I still need a Will if I have a Living Trust?
- Yes. A “pour-over” Will is commonly used alongside a Living Trust to ensure any assets not transferred into the trust during your lifetime are directed into it after your death.
- Can a Living Trust reduce estate taxes in New Hampshire?
- New Hampshire does not currently have a state estate tax, but a Living Trust can still be structured to reduce federal estate tax liability for larger estates and provide tax advantages through trust planning.
- Can I be the trustee of my own Living Trust in New Hampshire?
- Yes. In most cases, you can serve as the initial trustee and maintain full control over your assets. You also appoint a successor trustee to manage the trust upon your incapacity or death.
- Does a standard revocable Living Trust protect property from creditors?
- No. A creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your name. Generally, after your death, all property you owned—including assets held in a living trust—is subject to your lawful debts. However, all of our trusts include a Spendthrift Clause, which can protect your beneficiaries’ inherited assets from their creditors.
- What is the difference between a revocable and irrevocable trust?
- The explanation is in the name. A revocable trust can be terminated or changed by the Trustmaker during their lifetime. An irrevocable trust cannot be terminated and can only be changed under very limited circumstances.
- What is the difference between a personal representative, an executor, an administrator and a trustee?
- In New Hampshire, “personal representative” is a broad term that includes both executors (named in a Will) and administrators (appointed by the court if no Will exists or the named executor cannot serve). These roles all involve managing an estate through probate. A trustee, on the other hand, is the person responsible for managing a trust, which does not go through probate.
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