"A living trust is a legal document that contains your instructions about assets that you put into it, said Diane Chang of Central Pacific Bank. “Typically, when you draw up a living trust, you are the initial trustee so you remain in full control of those assets."
And that’s the principal difference between a living trust and a will. A will only takes effect after you pass away. Now, is a living trust a good idea for everyone?
"Many people feel that you should only create a living trust if you’re wealthy or elderly but that’s really not the case. Generally, if you have titled assets and you don’t want your loved ones to worry about court interference, if you become incapacitated or pass away, then you should consider drawing up a living trust."
Drawing up a living trust, with the help of a financial advisor, is just the first step.
"What you need to do is actually fund the trust, so you need to transfer your property from your individual or joint name into the trust name and that way your trust is going to have something to control."
Whether it’s a living trust, or a will, it’s a good idea to decide ahead of time how you want your estate handled in the event of your passing. Doing nothing puts your estate in bureaucratic hands.
“If you do that, the state of Hawaii will decide how your assets will pass. It’s generally going to be to your spouse or your heirs, your closest heirs, but that might not be necessarily what you want."
If you have a question for our financial experts, e-mail us at dollarsandsense@khon2.com
See the original article at: KHON2 Developing Stories
