What is a Living Trust?
By creating a living trust, you place your assets into a private trust which is fully controlled by you. During your lifetime, all the income earned by the trust will be yours and are transferred to the beneficiaries of the trust upon your death.
The person who creates a trust is known as the “Grantor”. Upon the death of the grantor, the property is managed by another person called a “Successor Trustee”.
Benefits of having a Living Trust.
Avoids Probate
One of the main benefits of a living trust is that its assets don’t have to go through probate. Probate is a judicial procedure whereby the court determines the inheritors of the assets of a deceased person.
Protects your privacy
Unlike Wills, Trusts are private documents. Since there is no intervention of courts in assets distribution, the Trust document is not made a Public record. No one can ever find out more about your distribution of assets by searching public records.
Assists in event of Incapacitation
The successor trustee will manage your trust without any intervention from the court in case of your illness or incapacitation.
Individual Roles
- GRANTOR- Also known as “Settlor”, is the person who creates the Trust. In a Living Trust, the Grantor usually serves as the “initial trustee” while the successor trustee is responsible to serve after the Initial Trustee.
- TRUSTEE- The trustee is the person who is in charge of the trust property and assets. This is commonly the same person who is the Grantor except for in the case of Irrevocable Trust, where the Grantor cannot be the trustee.
- SUCCESSOR TRUSTEE- The person who steps in the shoes of the Initial Trustee in case of his illness or incapacitation. Successor trustees are required to work in the best interest of the trust and its beneficiaries and not for their personal benefit unless the Declaration of Trust specifies it.
- BENEFICIARY- Beneficiaries are the person who will inherit all the trust property and assets upon the death of the Initial Trustee.
Living Trust v. Will
How to make a Living Trust?
1. Select the Property to be transferred to Trust
Not everything you own can be transferred to Trust. There are certain types of properties and assets like Retirement accounts, Vehicles, cash, etc which cannot be put into a trust.
2. Choose the type of Trust
Choose whether you want to make an Individual Trust or a Shared Trust in case you are married.
3. Name a Successor Trustee for your Trust
Think of a person who is reliable and trustworthy to be appointed as your successor trustee as he will step in your shoes in case you are ill or incapacitated.
4. Choose Beneficiaries
Choose the persons you want to get your trust property after you die. You can include family members, relatives, friends, charities, and organizations as your beneficiary.
5. Make your Trust Document.
After you are done with all of the above, you are ready to create your Trust Document. Use a reliable, legal, and safe platform like TrulyWill to get your Trust Document ready. You can start with the Do-it-yourself plan from TrulyWill which is the most convenient way if you have a simple financial and personal life.
If you are still confused with TrulyWill’s platform, you can use the attorney assist feature for any legal advice.
6. Sign and Notarize your Trust.
The trust document needs to be executed as per your State laws by signing it in front of a Notary. Unlike Wills, you don't need the signature of witnesses in your Trust Documents.
7. Fund your Trust
Funding of a Living Trust Fund involves the process of transferring assets like money, stocks, bank accounts, businesses, etc. into the Trust.
A trust will own only those properties which are transferred to it. If a property is not transferred to a Trust it might be subjected to probate or Estate tax.
8. Store your Trust in a safe place.
Once you are done with all the above formalities of making a Trust, you need to store it in a safe place to avoid being lost or stolen.
Do I need a Living Trust?
Starting your Estate Planning by creating a Living Trust is the best option if you want a hassle-free and inexpensive process of your assets and Property distribution.
Trust can help you to avoid probate and estate taxes.
Whether you need a living trust or not depends upon your needs and requirements. You should first understand your financial and personal situation to decide.
If you are confused, you can connect with an Estate Planning Attorney for guidance and select the best option for you. You can also review completed documents, or discuss other personal legal matters.
