Common Questions About Living Trusts
Posted on: 21 September 2022
Living trusts have a variety of benefits. You may think the only goal of a living trust is to avoid probate, but you can also set up asset management for minor children, provide another person with control of your assets in the event you become unable to do so, and name your beneficiaries. Here are some things to consider as you set up a living trust:
Which Type of Living Trust Do You Need?
The first step is to decide which type of living trust you need. You can opt for a shared trust if you are married or have a domestic partner that you co-own assets with. Otherwise, you can choose an individual trust if you do not share assets with anyone.
What Assets Do You Place in a Living Trust?
Since it is a living trust, you control how the assets are added while you are still alive. Most people do not place all of their assets in a living trust. The goal is to pre-plan your estate plan. You can place your most expensive items into a living trust, such as a home, land, large amounts of cash, or other high-value assets.
Who Are the Beneficiaries?
The next step is to decide who will be the beneficiaries of your property held in the living trust. In general, you can choose anyone in your family to be a beneficiary. You can also choose close friends. Some people may choose to leave items in a living trust for charity. Be sure to choose alternative beneficiaries as well in the event you need to make changes.
You also need to choose a successor trustee. This is the person who will distribute the property from the trust after you pass away. This is often an adult relative or very close friend. The person acting as the successor trustee can also be a beneficiary of the trust.
What If Beneficiaries Are Minors?
If your beneficiaries are minor children, you need to choose a person to manage those assets for them until they become adults. This person will have the authority to manage the property, but you also have to make the person a property guardian or a property custodian.
How Do You Prepare a Living Trust?
You can write your trust yourself, but it is most beneficial to have an attorney draft a living trust for you. This is a crucial document in your estate planning. It needs to be legally correct in the event someone tries to challenge your estate. The trust needs to be signed and notarized. Next, you need to transfer the titles of your assets to yourself as a trustee, not just yourself as an individual. Your attorney can also help you with this step. You can then store your living trust documents at home or in a safe deposit box with your important documents.
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