A living trust is an effective means to avoid Probate and transfer property at
your death. A living trust is a legal document that controls the use and transfer of any property you
have placed in trust. When you die, your named beneficiaries receive the property. If this sounds
like a Will, youre right; a living trust allows you to do the same basic things a Will does, with
the huge added benefit of avoiding Probate. Probate proceedings are expensive and can take many months
or even years before your property is eventually released to your heirs.
One big advantage of a living trust is that it is extremely flexible. You can
transfer all of your property by living trust, or, if preferred, use a living trust to transfer only some
assets, using other methods to transfer the remainder of your property (If you are interested in some
cost-effective ways to transfer your home, automobiles or financial accounts without the need of either
a WILL or a LIVING TRUST - and without the need for Probate - we would be glad to explain). Also, trusts
normally are not made public at your death - unlike Wills, which become part of the public record during
Living trusts are called living because theyre created while
youre alive. Theyre also called revocable because you can revoke or change them
at any time, for any reason, before you die. As long as you are considered mentally competent, you
still effectively own and control the property youve transferred to the living trust and can do
what you want with the property, including sell it, encumber it, spend it or give it away.
Once the necessary paperwork has been drafted to establish a legally enforceable
Probate-avoidance living trust, and after you have transferred your property to it, there is little difficulty
in maintaining the trust. No separate tax records nor taxpayer ID number are needed, as all trust
transactions are reported as part of your personal income tax return. Because you control the trust assets,
all financial institutions will treat your living trust transactions exactly like they had treated you,
personally, before you had transferred your property to trust.
A basic, Probate-avoidance living trust can also be combined with other types of
trusts. For example, you can create a living trust that first avoids Probate and then continues for
years after your death to control property left to someone with special needs, provide for your spouse
and children from a previous marriage, or save on estate taxes (AB TRUST).
In simplest terms, a LIVING TRUST is a legal entity that holds things of value.
You keep control over the trust property while youre living, and at your death, it goes to the people
you have named to inherit it. To create a LIVING TRUST, you must notarize a document that specifies the:
- Trustee - who has the authority to manage the trust property (you name
yourself as the trustee of a LIVING TRUST);
- Successor Trustee - who turns the trust property over to the beneficiaries
after your death;
- Trust Property - which are your assets that you have transferred into the trust;
- Beneficiaries - who receive the trust property at your death;
- Terms - which determine how the trust shall be governed, including your ability
to amend or revoke it at any time.
For most people of moderate means - whose estates wont have to pay federal
estate taxes - the two goals of advanced estate planning are:
Heres a summary of how a LIVING TRUST works to accomplish that:
- To control who will receive your property, and
- To ensure that your beneficiaries will not have to go through the time and expense
First, the LIVING TRUST document must be carefully drafted, naming yourself
as trustee to manage the property while you are living, and a successor trustee to distribute the trust
property at your death. You also name the trust beneficiaries who will receive the property when you die.
You then must formally transfer property into the trusts name. This will enable the successor trustee
- after you die - to simply obtain the trust property from whoever holds it and transfer it to the named
beneficiaries - without the need for Probate or other court proceeding.
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which will assist our firm as we begin drafting your Living Trust.