Revocable Living Trust
A trust is an arrangement where you transfer property to a trustee to hold and administer for the good of a beneficiary. A common type of trust to set up is a revocable living trust. Rather than a testamentary trust (which goes into effect at your death), a living trust is activated while you are still alive, and can be used for your benefit. Prior to your death, you can revoke or amend it, and if you set yourself up as the initial trustee, you are free to add or remove trust property and do with it as you see fit.
The elements of a valid trust generally include:
- Intention to create a trust: This is usually documented in the beginning of the trust agreement or declaration of trust.
- Trust property: There must be identifiable trust property for a trust to be created.
- Purpose: A trust needs a purpose (generally, any legal purpose not contrary to public policy).
- At least one beneficiary: The beneficiary(ies) must be identifiable with reasonable certainty for private trusts. For a charitable trust, less specificity is required. However, it's best to be as specific as possible when identifying the beneficiary(ies) to avoid disputes.
Typically, for a revocable living trust, the person who sets up the trust (the settlor) will be the initial trustee. You transfer your property into the trust and have it re-titled, but you maintain control. Upon death, the successor trustee takes over to administer the trust for your named beneficiaries. Unlike with a will, where the property is distributed at the end of the probate process, you can be more flexible and creative with how it is distributed, providing for your family members for many years.
Having a trust set up is also advantageous in case you become incapacitated. Rather than having a conservator appointed by the court to handle your financial affairs, your successor trustee can step in and start assuming those duties on your behalf.
The most important advantage of a living trust is keeping your estate out of probate. Probate is a long, expensive court process that your heirs or beneficiaries must go through before your property is distributed. The proceedings are also part of the public record (unlike trust administration, which remains private).
Depending on the value of your estate, you should consider setting up a living trust. It will give you more options for providing for your family members, and will help them avoid many hassles when you are gone.
Helix Law Firm can guide you through the estate planning process
If you need a living trust, we can draft one that's right for you and help make sure it's funded, giving you peace of mind for the future.