A living trust generally provides instructions on how to manage your assets and property while you are still alive. After the trust’s execution, you and your beneficiaries may begin to derive income or other benefits from the assets and properties contained within it.
As noted by AARP, if you own valuable real estate, you may prefer that its ownership transfer to your living trust while you are still alive. You may then start managing the trust’s property and spending the income from it in the way that your written instructions allow. Your trust’s instructions may also list any beneficiaries who may receive assets after your death.
Who may I name as my trust’s beneficiaries and its trustee?
You may name any individual or organization as a beneficiary, and you may change them whenever you wish. With its executor still alive, a living trust may go through several revisions. Upon your death, however, the provisions of the trust can no longer change.
Your choice of a trustee may require careful consideration. The individual you choose must competently and reliably manage your affairs if you become ill or incapacitated. A trustee’s responsibilities, for example, may include finding tenants to live in a rental property that your trust owns. Your trustee may also take care of collecting rent and making payments for the property’s maintenance and repairs.
May I give away tax-free money from the trust?
As explained by Kiplinger magazine, if your trust generates cash that you wish to give away, you may make annual tax-free gifts of up to $15,000 to each individual you choose. The tax-free amount doubles if you gift a married couple. You may also use income from the trust to pay unlimited amounts covering an individual’s medical bills or college tuition.