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Living trust forms are used to prepare
your estate. A living trust is a trust established during a person's lifetime
in which a person's assets and property are placed within the trust, usually
for the purpose of estate planning. The trust then owns and manages the
property held by the trust through a trustee for the benefit of the named
beneficiary, usually the creator of the trust (settlor). If you are looking for a Living Will click here.
A living trust is an effective estate planning tool for many individuals. Do you want to make sure your heirs don't mishandle or waste what you leave behind? Do you have pets that will need to be cared for if something were to happen to you? Do you or a parent anticipate entering a nursing home in the future and want to protect your eligibility for Medicaid? These are only a few reasons you may want to investigate whether a living trust is right for you.
A trust document is a method of holding property in a fiduciary relationship for the benefit of the named beneficiaries. The same individual may be the grantor, trustee and beneficiary. The grantor may also name successor trustee if the original trustee dies or is unable to serve, as well as successor beneficiaries.
To create a living trust, the owners of the trust (also called the grantors or settlors) make a living trust document and transfer real property or other assets to the trust. Assets are transferred into the trust belong to the trust and are managed by the trustee. The trustee manages the trust property for the benefit of the beneficiaries, according to the terms of the trust document.
There are two basic categories of living trusts:
Living trusts may provide many benefits, such as avoiding probate, protecting assets from creditors, keeping your financial affairs confidential, minimizing taxes, delay, and legal expenses, and more, when used properly. When your estate is distributed under a will, you lose control over what happens to it once received by the heirs. Living trusts provide a way to protect and manage your estate even after your death or incapacity. Even if you don't have a large estate, they can serve many purposes, such as ensuring that your pets are cared for according to your instructions to the trustees, protecting governments benefits or eligibility for Medicaid, or allowing you to preserve confidentiality in your financial affairs and choice of beneficiaries.
A living trust is a very effective estate planning tool for many individuals. Some of the advantages when you make a living trust include:
People often wonder whether it is necessary to have a living trust if they already have a last will and testament. A will is an essential document for everyone to have, regardless of whether you also have a trust. By having a will, you can also be ensured that any property which hasn't been transferred into your trust will be distributed according to your wishes. For example, you may acquire property shortly before you die and never had the opportunity to transfer the property into the trust. A will typically contains a residuary clause which specifies how to distribute any property which hasn't already been designated to go to a named beneficiary.
Unlike a will, a trust continues after the incapacity or death of the grantor. Therefore, the successor trustee can manage your assets according to your instructions until a point in time specified in the trust instrument. This is in contrast to a will, since you will have no say in how the property is used once you die and the beneficiaries inherit their share.
A testamentary trust may also be created in a will. These types of wills are sometimes referred to as pourover wills. By creating a testamentary trust and naming a trustee in the will, any property not specifically identified in the will, such as later-acquired property, can be distributed according to the terms of the testamentary trust. Such a trust may also allow the trustee to manage the inherited property for minor or disabled beneficiaries until the trust expires or a certain condition is met, such as marriage or graduation of a beneficiary.
A living trust can serve many purposes, so whether you need a living trust will depend on your reasons for creating a trust. Typically, a living trust is most popular among those with significant assets and over the age of 50. However, because of the advantages described above, it may also make sense for anyone who wishes to leave property to beneficiaries who are minors or who are disabled, seeks to avoid probate procedures, keep their financial affairs and chosen beneficiaries private, or protect assets from the reach of creditors. A living trust avoids the oversight of the court involved with a testamentary trust. When making an estate plan, a trust is an important legal tool to be considered.
Q: We just created a living trust. How do we put our house into the trust?
A: You may put the property in trust by creating a quitclaim or warranty deed transferring the property from the current owners to the trust. To add real estate to a living trust, the grantor(s) of the trust create a real property deed with the living trust named as grantee. The deed should be signed and recorded in the local recorder office where the real property is located.
Q: Is there a type of living trust form that will stop a home foreclosure or bank auction?
A: If the foreclosure process has already been started, putting the property into a trust will not be helpful in stalling or stopping the foreclosure process. If a person knows that there is a pending claim by a creditor, and then makes a transfer of property to a trust, it may give rise to claims that is a fraudulent conveyance intended only to prevent creditors from collecting money owed out of the asset. If a claim of fraudulent conveyance is proven, the court can void the transfer to the trust and determine that the property is still actually in your ownership.
Q: My uncle is the trustee of our family trust, but he's going through personal problems and due to the conflict going on, has ignored u sand hasn't given the beneficiaries the trust income for a while now. What can be done?
A: Trustees are considered fiduciaries, which means they have a duty to follow the instructions detailed in the trust instrument and act with the utmost care and loyalty toward the trust property. A trustee must act in the best interests of the trust and not for personal benefit. For example, a trustee should not profit from or borrow against the trust.
When a trustee doesn't follow instructions or acts for personal gain, it's called a breach of fiduciary duty. If a trustee breaches a fiduciary duty, an action may be filed in court to have a trustee ordered to do or not do something, show the court an accounting of all transactions, be removed and replaced with a successor trustee, or other relief as may be needed.
Q: I'm wondering if my wife and I create a living trust, will we need to file it at court so that the contents of the trust can be seen by anyone?
A: No, a trust agreement is a private document, allowing you to avoid probate filings like a last will. While you may wish to voluntarily have it on file in some instances, but you do not have to file it, and therefore can keep your assets, debts, and choice of beneficiaries from being disclosed.
Q: How do I choose between a revocable living trust and an irrevocable living trust?
A: The answer will depend on your circumstances and your reason for wanting to make a trust agreement. To put it simply, when you create a revocable living trust, you still have a form of control in being able to change or terminate the trust, therefore, it is possible that creditors could attach the assets in the trust. In contrast, with an irrevocable trust you give up all rights to control or change it, so creditors are less likely to be able to claim you have ownership of the trust assets.
The grantor owes taxes on the income of revocable trusts and any trust property remaining when the grantor dies becomes part of the grantor's taxable estate, unlike irrevocable trusts. Some examples of an irrevocable living trust include:
These examples of irrevocable living trust agreements restrict the use of and how much income a beneficiary of the trust may receive.
Q: How do I know if I need a living trust?
A: It is an important tool to consider as parts of one's estate planning. The answer will depend on your personal circumstances and needs. A living trust, also called an inter vivos trust, may be used for various purposes, such as asset protection, reducing federal estate taxes and other taxes, avoiding probate of certain assets, protecting eligibility for government benefits, ensuring irresponsible heir s don't waste inheritances, helping a charitable cause, and more.