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What is a Living Trust?

For the purposes of this article, and because a large majority of people choose this form of trust, we will be specifically talking about revocable living trusts.

A  revocable living trust is a type of trust that allows the owner of the trust, referred to as the initial trustee, to transfer assets in and out of the revocable living trust and to spend any of the money in the any accounts owned by the trust, for as long as that owner remains the trustee.

In other words, when you have a revocable living trust, you manage all of the assets in it same as if the assets were in your name only. You just go about doing it in the name of the trust.

The name living trust includes the word “living” because the trust is created and used during the lifetime of the initial trustee.

How to Fund a Revocable Living Trust

Once the living trust has been created, it must be funded to have any value at all. A living trust into which no assets have been transferred is simply a document with no power at all.

These are assets that must be transferred into the living trust which is called funding the trust:

• Any real estate: this is done by quit-claiming the real estate into the name of the trust. For instance, say John and Jane Everyman own their own home, and want to be sure their children can immediately have access to that asset upon their demise or should they both become incapacitated. By quit-claiming their house into their revocable living trust ensures this will can happen.
• Bank accounts:  typically, a complete living trust package includes a trust summary, a one page document you can take to your bank(s) to change the name of your account(s) from yours to the name of your living trust. You are the only one with access to the account until it comes time for your Successor Trustee to take over.

What you don’t need to transfer to your living trust:

• Life insurance policies: you have already named a beneficiary and there is no need to do it again in the trust.
• 401K, IRAs, and many other retirement accounts: these types of accounts cannot be placed in any type of trust because they must be owned by individuals. Nevertheless, you can name a beneficiary at the  time you set up your account.
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whether it be the individuals previously named as successor trustees and, or, beneficiaries, and any of the property in the trust, including quit-claiming real property in and out of the trust, such as a house or houses, change the beneficiary(ies) of an art collection, vehicle(s), jewelry, or anything else of value.

How to Transfer Assets In and out of the Living Trust

A Living Trust Avoids Probate

Besides directly transferring your assets to your heirs, rather than your heirs having to deal with probate, a Revocable Living Trust has the added benefit of keeping your wishes and beneficiaries private instead of your affairs becoming public as they do when going through probate.

 This is because the assets are distributed to the heirs privately by the Successor Trustee who basically automatically takes over after the demise of the Initial Trustee. Probate Court does not become involved at all.

However, if some property was inadvertently left out of the trust, or the initial Trustee passed away before the property could be transferred into the Revocable Trust, then, the parts of the estate not yet transferred into the trust will undergo probate. With a Pour-over Will, however,  bequeathing all remaining assets to the Trust, then it’s just a matter of the Probate Court turning all remaining assets to the Revocable Living Trust to be distributed to the beneficiaries of the trust by the Successor Trustee. All of the trusts we create include a Pour-over Will.

What Happens Once the Successor Trustee Takes Over

Powerful Reasons to Choose this Living Trust Package

• A licensed attorney creates and reviews your Living Trust WITH you! Clearly, you gain an advantage over just having your Living Trust and Living Will typed up by an online non-attorney service, or creating it yourself using online software as offered by well-known sellers of trusts. Your Living Trust and Living Will are, after all, the two most important legal documents you’ll ever need. Shouldn’t you look it over with a highly-experienced living trust attorney, rather than creating it yourself, or having a typist type it for you?
• We include a free Living Will with your Living Trust Package because we understand the crucial importance of this document – you should not go forward in life without one! As you know, life has a way of throwing surprises your way when least expected. Do you really want to be the one without your Living Trust, let alone your Living Will, in place, if life decides to surprise you?