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Living Trusts: A Primer

February 24, 2011 Leave a comment

Living trusts can be set up as either revocable or irrevocable. If revocable, the creator of the living trust retains control over the trust during his lifetime. If irrevocable, the creator of the living trust does not retain control over the trust during his lifetime. The benefit of creating an irrevocable trust is to avoid tax liability upon the estate tax of the funds within the trust. This is important only in estates over approximately $600,000.

Living trusts can be set up relatively simply; however, they must be funded (by naming the trust as beneficiary, for example), and the trust document must be created and properly executed. How this must be done depends on the jurisdiction or state law where the creator of the living trust resides.

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