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.
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