Why You Need a Living Trust
By Masood Khan

This article is not to be construed as legal advice. Please consult an attorney for your specific legal situation.

Have you planned ahead to make sure that your assets are distributed properly upon your death? In planning for your estate, you should be aware of the Living Trust. The greatest advantage of having a living trust is that property left through the trust doesn't have to go through the painstaking process of probate court before it reaches the people you want it to go to after your death. For those who are unfamiliar with the term, probate is the court-supervised process of paying debts and distributing property to the people who inherit it after a person dies. For Muslims, this is an especially important issue due to the Islamic shari’ah requirements of how one’s assets should be distributed after death. If you don’t have a will or a trust that states how your assets are to be distributed, the state will distribute your assets for you through the probate court.

Typically, the probate process can continue on for months before the inheritors get anything. Usually, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from estate property, which would have otherwise gone to the people who inherit the deceased person's property.
This is how probate works: After your death, the person you named in your will as executor files papers in the local probate court. The executor must prove the validity of the will and present the court with lists of your property, your debts, and who is to inherit what you've left. After that, relatives and creditors are officially notified of your death.

During the probate process your executor must secure and manage your assets which can take several months to a year. Depending on the specifics of your will, and on the amount of your debts, the executor may have to decide whether any of your assets need to be sold.

The bottom line is, by the time your inheritors get the assets that you willed for them, there's less for them to get. In many cases, about 5% or more of the property has been consumed by attorney and court fees.

What is a Trust Anyway?
A trust is a legal arrangement whereby one person, called a trustee, holds legal title to property for another person, called a beneficiary. A person can be the trustee of his own living trust, keeping full control over all property held in trust during the course of his lifetime.
A "living trust,” also known as an “intervivos trust,” is simply a trust you create while you're alive, rather than one that is created at your death under the terms of your will.

How does a Living Trust Avoid the Dreaded Probate Process?
Property that’s put into a living trust before death doesn't go through the probate process. The successor trustee -- the person appointed to handle the trust after a person’s death -- simply transfers ownership to the beneficiaries named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyers or court fees to pay that you would have to normally pay for probate. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.

Is a Will Still Needed If I Have a Living Trust?
Yes. A will is an essential safeguard for property that you don't transfer to yourself as trustee of the Living Trust. For example, if you acquire a house shortly before you die, you may not think to transfer ownership of it to your trust -- which means that it won't pass under the terms of the trust document. But if you have a will, you can include a clause that names someone to get any property that you haven't previously designated to be left to a particular person or entity.

If you don't have a will, any property that isn't transferred by your living trust or other probate-avoidance device will go to your closest relatives in an order determined by state law. When one dies without a will and no provision is made for the distribution of certain assets, then those assets will be distributed in accordance with state laws in a way that you would not agree with. This is especially important for Muslims who seek to have their assets distributed according to Islamic shari’a.

Masood Khan is an attorney with Khan & Associates. He can be reached at (818) 994-0347 or via email at Mkhanlaw@aol.com. Call Khan & Associates to draft a will and a Living Trust in accordance with the principles of Islamic Shari’ah.


Editor: Akhtar M. Faruqui
2004 pakistanlink.com . All Rights Reserved.