A living trust— also called a revocable living trust— is an invaluable tool for estate planning, not least because it offers a private, efficient, no-headache way to transfer property after your pass on without the involvement of a probate court.
Let’s take a look at ten questions you should ask yourself while creating a living trust.
#1 What Assets Do I Want to Protect?
When setting up your living trust, you should perform an inventory of your assets. These should include any real estate, family heirlooms, and any savings or retirement plans. Be sure you know where the paperwork is for each asset so you can prove ownership. All of these assets may be transferred to your living trust.
#2 How Complex Are My Estate Planning Needs?
Ask yourself, based upon my asset inventory and the circumstances of my estate, do I need a living trust? The answer is, if you have any amount of property to be distributed upon your death, and you are averse to the idea of a probate judge interfering with your affairs, then a living trust may be the best fit for your needs.
It’s also important to keep in mind that when you send your estate to probate, your privacy will be violated. Probate means a list of your assets will be easily accessed by the general public. If you want to keep the contents of your estate between you and your beneficiaries, a living trust is right for you.
#3 Who Do I Want to Manage My Property?
There are three stakeholders when you create a living trust: you (the creator) and the trustee, the successor, and the beneficiaries. The trustee is legally bound to ensure all assets are managed and distributed in accordance with creator’s terms.
People name themselves and a spouse as initial trustees. This allows them to maintain autonomy over property placed within the trust during their lifetime (providing they are mentally competent to manage their own affairs).
If you become incapacitated, and cannot manage your property yourself, your co-trustee or a successor trustee will step in for you. Many people name their children as successor trustees.
#4 Am I Concerned My Children Won’t Manage My Assets Responsibly After I Pass?
It’s important to choose the successor trustee of your estate carefully. If you are concerned your children aren’t up to the task, it is possible to appoint a professional fiduciary as your successor to distribute assets according to your wishes.
You may appoint a fiduciary at your discretion, which can include a trust department at your bank, a private fiduciary, an attorney, or a professional company. You may also choose to apportion your assets in certain amounts over a specified period of time which may provide peace of mind in such circumstances.
#5 Do I Anticipate Family Conflict After I Pass?
If you are concerned about family infighting over the distribution of assets after you pass, you can make provisions in your living trust to help avoid such conflicts. While a disgruntled heir can still cause problems even if a living trust exists, in most cases having one in place resolves common causes of family discord after a loved one dies.
#6 Am I Likely to Make Changes to Estate Plan During My Lifetime?
A revocable living trust allows you to manage your property and change or dissolve the trust at any time for any reason at your full discretion. As the trustee, you have total control over your assets which means you can exchange, sell or invest them at any time.
If control over your property during your lifetime is a priority for you, a living trust could be an excellent solution to your estate planning needs.
#7 How Important Is Privacy to Me?
A living trust does not become a public document upon your death, and as such provides a layer of privacy and protection from legal challenges. A living trust can be contested, but again, it provides a level of privacy other estate documents cannot.
If privacy is a major concern for you, it’s definitely a good idea to consult an attorney about creating a living trust.
#8 Do I Own Real Estate?
Real estate that is transferred to the trust will be retitled so that it becomes property of the living trust. This does not mean you cannot control your property, just that they belong to the living trust which is a wholly separate entity according to estate law.
Your property that does not require a title is listed on an attachment to the living trust.
#9 Am I Concerned About What Happens If I Become Incapacitated?
Many people are concerned about their estate going to conservatorship in the event they become incapable of managing their own affairs. With a living trust, assets are managed by a co-trustee or successor trustee named in the trust agreement if the creator becomes incapacitated.
#10 Should I Consider Setting Up A Living Trust Without An Attorney?
Probably not. While lots of software packages promise cheap, easy alternatives to legal advice, no DIY tool can replace the experience, expertise and specialized knowledge a professional offers. The courts are rife with problems and challenges that have arisen as the result of poorly crafted living trusts.
In the vast majority of cases, it would be unwise to assume a generic software package could provide a comprehensive, legally compliant living trust agreement tailored to the specific circumstances of any given person. Far better to make an investment now to ensure your legacy survives long after you’ve passed on.
The attorneys at Port Legal are experts in creating living trusts which are compliant with both federal and state laws. If you’re ready to skip the software and go straight to the professionals, click here for a free legal consultation today.