Living Trust Forms
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. Or See other trust forms.
Living Trust Forms Package Easy OrderEasy Order Process. Simply answer a few questions. Includes Living Trust Agreement, Amendment to Trust, Assignment to Trust, Notice of Assignment to Trust and Property Record.
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Living Trust TopicsPour Over Will
Living Trust vs Will- The Best Way to Avoid Probate
What is a Living Trust?
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:
- A revocable trust may be changed or terminated by the grantor of the trust. The settlor may reserve the right to take back any trust property and remaining revenues. Revocable trusts are also referred to as grantor trusts, and therefore the income is taxable to the grantor and any assets in the trust when the grantor dies become part of the grantors' taxable estate.
- An irrevocable trust can't be changed or terminated without the consent of the beneficiaries. By transferring assets into the trust, the creator of the trust gives up control and ownership. Therefore, the assets and income are no longer taxable to the grantor, nor do they become part of the settlor's taxable estate when he or she dies. Some types of irrevocable trusts include an irrevocable life insurance trust, irrevocable family trust, Medicaid income trust, special needs trust, and charitable trust.
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.
Advantages of a Living Trust
A living trust is a very effective estate planning tool for many individuals. Some of the advantages when you make a living trust include:
- Privacy- The trust document is a private document which is not required to be filed as a public record. Because assets are owned in the named of the trust, trusts provide a level of privacy for ownership. When a will is probated, an inventory of your assets and debts becomes a matter of public record once filed. Unlike a will, the terms of the trust do not become a public document in the probate process.
- Asset protection- Property placed in an irrevocable trust may be placed beyond the reach of creditors. Because a trust document isn't a matter of public record, it may also be more difficult for creditors to discover who inherits the property and make a claim on it.
- Spendthrift protection- If you die leaving minor children or other financially irresponsible beneficiaries, the trust may continue and have the assets managed by the trustee until the beneficiaries are sufficiently capable of managing the assets themselves.
- Incapacity- If you have an accident or become incapacitated, the trustee can mange your financial affairs without the need for creating a guardianship or conservatorship.
- Tax Liability- A properly structured credit shelter trust may minimize the estate taxes that might otherwise be due on large estates.
- Probate proceedings- The expense, burden and delay of probate proceedings may be avoided since property owned by the trust passes outside of probate. If you own real estate in more than one state, placing the property in trust can avoid the cost and hassle of multiple probate proceedings.
- Separation of assets- When a couple has significant assets before getting married, placing assets in trust can help avoid the assets from becoming community property.
- Benefits eligibility- A Medicaid income trust can be used to ensure eligibility for Medicaid if a parent enters a nursing home. A special needs trust can allow a person with special needs to receive gifts, lawsuit settlements, or inheritances and not lose disability benefits.
- Pet care- Many states now recognize trusts that provide for the care of your loved animals and ensure they are provided for when you are no longer able.
Living Trusts and Wills
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.
Is a Living Trust Right for Me?
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.
How Can a Home Be Transferred into the Trust?
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.
Will Putting Real Property in a Trust Prevent Foreclosure?
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.
How Can a Trustee Be Forced to Carry Out Duties?
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.
Is the Privacy of My Financial Affairs Ensured by a Trust?
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.
What is the Difference Between a Revocable or Irrevocable Trust?
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:
- A Medicaid Income Trust (also called a Miller Trusts or Qualifying Income Trust) allows a person entering a nursing home to "spend down assets" to qualify for Medicaid. The terms of the trust document restrict how much income may be used for the benefit of the beneficiaries of the trust may
- A Special Needs Trust (also called a Supplemental Needs Trust) protects minor children and adults with disabilities who rely on government benefits and need to maintain income eligibility levels while receiving other income, such as gifts and inheritances. Such trusts are often used to pay for things like education, recreation, counseling, and medical attention that exceed usual living expenses. In some cases the trustee can use trust property for basic necessities if the trust allows that discretion.
These examples of irrevocable living trust agreements restrict the use of and how much income a beneficiary of the trust may receive.
What are the Benefits of a Living Trust?
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.
Sample - 22 pages. Only showing a few pages. Preview the entire trust on the product page.
REVOCABLE LIVING TRUST AGREEMENT
THIS REVOCABLE LIVING TRUST AGREEMENT, (hereinafter "Trust"), is being made on this the ________ day of _______________, 20_____, by and between ___________________________________ of ____________________ County, State of Arizona, hereinafter referred to as the Trustor, whether one or more, and the Trustee designated below and shall be governed and administered in accordance with the following terms and provisions:
NAME OF TRUST
1. NAME OF TRUST: This trust may be referred to as THE ________ REVOCABLE LIVING TRUST.
2. TRUSTOR AND BENEFICIARIES: The Trustors or Settlors of this trust are _______________________ and _______________________, Husband and Wife, residing at ___________________________________, ___________________________________, Arizona ________. As used herein, the term "Trustor" shall mean all trustors of this trust, whether one or more. The Trustors are married and parents of the following living children:
The Beneficiaries of the Trust during the lifetime of the Trustors is the Trustors. Except as otherwise provided herein, upon the death of the Trustor, the Beneficiaries are the Children of the Trustor.
3. TRUSTEE APPOINTMENTS: The Trustor, hereby appoints __________________, the Trustor, as Trustee of this Trust. If the Trustor, is unable to serve as Trustee for any reason, then the Trustor hereby appoints __________________ as Successor Trustee. If neither the first or second Trustee are able to serve as Trustee for any reason, then the Trustor hereby appoints __________________ as Successor Trustee, whether one or more. The Trustee shall have all powers as provided in this agreement and the laws of the State of Arizona. The principal place of administration of this trust is the Trustors place of residence, regardless of the residence of the Trustee. If multiple or Co-Trustees are appointed their exercise of powers shall be governed by Arizona Code Section 14-10703.
ASSETS OF TRUST
4. ASSETS OF TRUST: All rights, title, and interest in and to all real and personal property, tangible or intangible, listed on the attached Exhibit "A", is hereby assigned, conveyed and delivered to the Trustee for inclusion in this Trust.
5. ADDITIONS TO TRUST PROPERTY: Additional property may be conveyed to the Trust by the Trustor, or any other third party at any time. Trustor may execute such other documents as is necessary to effectuate the assignment of property to this Trust.
6. RIGHTS TO TRUST ASSETS: Except as specifically provided herein, the Beneficiaries of this trust shall have no rights to any assets of the trust.
7. HOMESTEAD EXEMPTION: Grantor(s) reserves the right to use, occupy and reside upon any real property placed in this Trust as their permanent residence during their lives. Grantor(s) shall have the right to reside in the property rent free and without charge except for the payment of the following: (1) all mortgages costs and expenses (2) all property taxes, and (3) reasonable expenses of upkeep and maintenance. Grantor(s) retain the legal right to use and benefit from the property in all respects. It is the intent of this provision to retain for the grantor(s) the requisite beneficial interest and possessor right in and to such real property needed to retain their qualification for any exemption, freeze of tax rates and/or valuation granted to any individual or individuals so qualifying.
TRUSTEE POWERS AND OTHER PROVISIONS
8. POWERS: The Trustor does hereby grant to the Trustee all powers necessary to deal with any and all property of the Trust as freely as the Trustor could do individually. The Trustee shall at all times and in all actions act as a fiduciary in good faith. Trustee is hereby granted all powers contained herein and all powers conferred upon Trustee under the applicable statutes and laws of the State of Arizona, to the broadest extent possible, including, but not limited to all of the powers authorized by Arizona Code Section 14-10801 and 14-10820. All powers granted to the Trustee by this Trust Agreement are ministerial in nature and are not intended to create or alter substantial rights. Without limiting the foregoing general statement of powers, the Trustee powers include, but shall not be limited to the following:
(A) TRUST ASSETS: The Trustee is hereby authorized and granted all powers necessary to retain as a permanent investment of the Trust, or for such time as the Trustee shall deem advisable, the original assets of the Trust and all other property later transferred, devised or bequeathed to the Trustee, without liability for loss or depreciation resulting from such retention.
(B) NONPRODUCTIVE ASSETS: The Trustee is hereby granted all powers and authority necessary to hold uninvested cash, and to retain, acquire, and hold unproductive realty or personalty for any periods deemed advisable by the Trustee, even though the total amount so held is disproportionate under trust investment law or would not be permitted without this section.
(C) INVESTMENT POWERS: The Trustee is hereby granted all powers necessary to invest and reinvest any and all of the property of the Trust in any and all types of property, security or other asset deemed by the Trustee to be in the best interests of the Trust as a whole, without limitation or regard to yield rates or income production.
(D) SECURITIES: The Trustee is specifically authorized, in his or her discretion, to maintain brokerage margin accounts, to buy, sell or transfer options, warrants, puts, calls, commodities, futures contracts, and repurchase contracts, and to exercise any options, rights, and conversion privileges pertaining to any securities held by the Trustee as Trust assets.
(E) ADDITIONAL PROPERTY: The Trustee is specifically authorized to receive additional property from any source and to hold and administer this property as part of the Trust Estate.
(F) SELL AND LEASE: The Trustee is hereby granted all powers necessary to sell, convey, lease, transfer, exchange, grant options to purchase or otherwise dispose of any Trust asset on any terms deemed by the Trustee to be in the best interests of the Trust, to execute and deliver deeds, leases, bills of sale, and other instruments of whatever character, and to take or cause to be taken all action deemed necessary or proper by the Trustee in furtherance of this authority.
(G) INSURANCE: The Trustee is specifically authorized to insure Trust property and assets with any insurer against any hazards, foreseeable or unforeseeable, including public liability, and to use insurance proceeds to repair or replace the asset insured, at the discretion of the Trustee. In addition, the Trustee may carry or purchase life insurance on the life of any Trust beneficiary, and may exercise or release any rights with regard to such policy.
(H) BORROWING AND LENDING: The Trustee is specifically authorized to lend Trust funds to any borrower, on any terms deemed advisable, and to change the terms of these loans at any time and for any reason. This authorization includes the power to extend loans beyond maturity with or without renewal and without regard to the existence or value of any security, and to facilitate payment, to change the interest rate, to consent to the modification of any guarantee, and to forgive loans in their entirety.
The Trustee is further granted all powers necessary to borrow whatever money the Trustee deems desirable for any Trust on any terms from any lender, and to mortgage, pledge or otherwise encumber as security any assets of the borrowing Trust.
(I) MODIFICATION OF TERMS: The Trustee is specifically authorized, incident to the exercise of any power, to initiate or change the terms of collection or of payment of any debt, security, or other obligation of or due to any Trust, upon any terms and for any period, including a period beyond the duration or the termination of any or all Trusts.
(J) CLAIMS: The Trustee is hereby granted all powers necessary to compromise, adjust, arbitrate, sue on, defend, or otherwise deal with any claim, upon whatever terms the Trustee deems advisable, against or in favor of any Trust, and to abandon any asset the Trustee deems of no value or of insufficient value to warrant keeping or protecting. The Trustee is further authorized, in his or her sole and absolute discretion, to refrain from paying taxes, assessments, or rents, and from repairing or maintaining any asset; and to permit any asset to be lost by tax sale or other proceeding.
(K) DISTRIBUTIONS: The Trustee is specifically authorized to distribute any shares of the Trust in cash or in property, or partly in each, and the Trustee's valuations of and selection of assets upon making distribution shall, if made in good faith, be final and binding on all beneficiaries.
(L) NOMINEE: The Trustee is specifically authorized to hold any or all of the Trust assets, real or personal, in the Trustee's own name, the name of any Co-Trustee, corporation, partnership, or any other person as the Trustee's nominee for holding the assets, with or without disclosing the fiduciary relationship. A corporate Trustee does hereby have the power necessary to appoint a Trustee to administer property in any jurisdiction in which it shall fail to qualify.
(M) FORECLOSURE: The Trustee is specifically authorized to foreclose on any mortgage, to bid on the mortgaged property at the foreclosure sale, or acquire mortgaged property from the mortgagor without foreclosure, and to retain or dispose of the property upon any terms deemed advisable by the Trustee.
(N) ENCUMBRANCES: The Trustee may pay off any encumbrance on any Trust asset and may invest additional amounts of money in the asset, as the Trustee deems appropriate, to preserve the asset or to increase its productivity.
(O) VOTING: The Trustee may vote stock for any purpose, either in person or by proxy, may enter into a voting trust, and may participate in corporate activities related to a trust in any capacity as permitted by law, including service as officer or director.
(P) REORGANIZATION: The Trustee is hereby granted all powers necessary to unite with other owners of property similar to any property held in this Trust in carrying out the foreclosure, lease, sale, incorporation, dissolution, liquidation, reincorporation, reorganization, or readjustment of the capital or financial structure of any association or corporation in which any Trust has a financial interest; to serve as a member of any protective committee; to deposit Trust securities in accordance with any plan agreed upon; to pay any assessments, expenses, or other sums deemed expedient for the protection or furtherance of the interests of the beneficiaries; and to receive and retain as Trust investments any new securities issued pursuant to the plan, even though these securities would not constitute authorized Trust investments without this provision.
(Q) PURCHASE FROM ESTATE OR TRUST: The Trustee is specifically authorized to purchase property of any type, whether real or personal, from a Trustor or beneficiary's estate or Trust for their benefit upon such terms and conditions, price and terms of payment as the Trustee and the respective personal Representative shall agree upon, and may hold any property so purchased in Trust although it may not qualify as an authorized Trust investment except for this provision, and may dispose of such property as and when the Trustee shall deem advisable.
(R) ASSISTANTS AND AGENTS: The Trustee is hereby granted all powers necessary to employ any person or persons the Trustee deems advisable for the proper administration of any Trust, including but not limited to: attorneys-at-law, accountants, financial planners, brokers, investment advisors, realtors, managers for businesses or farms, technical consultants, attorneys-in-fact, agents and any other consultants and assistants.
(S) RESERVES: The Trustee is hereby authorized to set aside and maintain reserves for the payment of present or future expenses, including but not limited to: taxes, assessments, insurance premiums, debt amortizations, repairs, improvements, depreciation, obsolescence, maintenance, fees, salaries and wages, as well as to provide for the effects of fluctuations in gross income, and to equal or apportion payments for the benefit of income beneficiaries under the Trust.
(T) MANAGEMENT OF REALTY: The Trustee is specifically authorized to deal with real and personalty, including oil, gas, and mineral rights in any manner lawful to an owner on any terms and for any period, including periods beyond the duration or termination of any Trusts.
(U) BUSINESS: With respect to any business that is part of or may become part of any Trust, no matter how such business may be organized, the Trustee is hereby granted the authority to:
a. hold, retain and continue to operate such business solely at the risk of the Trust estate and without liability to the Trustee for any resulting losses;
b. incorporate, dissolve, liquidate, or sell such business at any time and upon any terms as the Trustee deems advisable. In exercise of this authority, the Trustee may obtain a qualified appraisal, although the Trustee is not obligated in any way to seek other offers in contracting for sale to any person including another shareholder, trust, or beneficiary; mortgage, pledge or otherwise encumber any assets of any Trust to secure loans for any business purposes;
c. engage in the redemption of stock and to take such actions as are necessary to qualify the redemption under IRC Sections 302 or 303 and the applicable requirements of state law.
d. create a special lien for the payment of deferred death taxes under IRC Section 6324, or similar provisions of state law.
e. create, continue, or terminate an S-Corporation election.
Except as otherwise provided herein by provisions inconsistent therewith, the Trust shall be administered by the Trustee in accordance with the provisions of the Revised Uniform Income and Principal Act. See Arizona Code Sections 14-7401 through 14-7431.
9. AUTHORITY TO ACT: The approval of any court, the Trustor, or any beneficiary of any Trust created by this Trust shall not be required for any dealings with the Trustee of this Trust, and any person so dealing with the Trustee of this Trust shall assume that the Trustee has the same power and authority to act as any individual does in the management of his or her own affairs. Further, upon presentation of a copy of this page and any other page of this Trust, any person shall accept same as conclusive proof of the terms and authority granted by this Trust, and shall assume that no conflicting terms or directions are contained in any of the omitted pages.
TRUST ADMINISTRATION DURING LIFE OF TRUSTOR
10. MANAGEMENT OF TRUST PROPERTY: All property of the Trust shall be managed by the Trustee at the direction of the Trustor. The Trustee shall collect all income of the Trust, and shall pay from the income such amounts and to such persons as the Trustor may from time to time direct. In the absence of direction from the Trustor, the Trustee may accumulate the net income of the Trust, or may disburse any portion of the net income to or for the benefit of the Trustor. The Trustee is also authorized to pay from the principal of this Trust any and all amounts necessary for the health or maintenance of the standard of living of the Trustor.
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