How to Set Up a Living Trust
Are you planning for the future?
What will happen to your property after you pass? Will it go into months and months of probate while your family wait and pay hundreds in court costs and legal fees? Or, do you have a living trust?
Are you considering setting up a living trust yourself?
A trust is an arrangement that sets out guidelines and directions for management of your property. A living trust is a trust that you create to go into effect during your lifetime, rather than upon your death.
People often create living trusts to avoid probate. Probate is the court process of distributing your property to heirs and creditors after you die. Depending on how much property you have, probate can take a very long time. A living trust expedites the process because the trustee just follows your directions and transfers your property to your beneficiaries. It avoids the probate process altogether.
Writing the Trust
Writing a trust doesn’t need to be complicated, especially if you don’t have a lot of property. To create a trust, you must first write a Declaration of Trust, or the trust document. In this document you should specify:
- The trustee – This is the person responsible for taking care of the trust and following its instructions. Usually for living trusts, you can name yourself as the trustee.
- The successor trustee – If you named yourself the trustee, this is the person who takes over management of the trust after you die. It may be wise to name a couple successor trustees in case one trustee decides they no longer want the responsibility.
- The beneficiaries – These are the people who will benefit from the trust and receive the trust property.
- The trust property – List all the property you want to be included in the trust. Describe the property as clearly as possible to avoid confusion later on. For example, if you own more than one house, write “The house at 335 Awesome Lane, Happy Town, Ca” instead of “My second house.”
- Management and distribution instructions – This is where you give the trustee the job of taking care of your property. How do you want it managed? Do you want the trustee to rent out your property and give the proceeds to your kids? Or, do you want the trustee to invest the money? How do you want the property divided? Who gets what and when?
Once you’ve written out your trust, sign it in front of a notary, and make a copy for safe keeping.
Funding the Trust
You’re not done yet. A living trust is useless unless you transfer the listed assets and property into it. If you’ve listed real estate, bank account, stocks, bonds, you need to transfer title of those assets to the trust. You can do this by signing a deed, giving the trust ownership of the property, and the trustee the power to control it.
If you want to write your trust yourself, but need a little more guidance, contact the professional Attorneys at Goldfinch Winslow, LLC and we will help you through the legal process.