What Is A Living Trust?
A living trust possesses ownership rights and legal title to the assets contained in the trust and must be managed in accordance with the terms set out in the trust documents. The trust documents identifies the specific assets held in trust and the persons identity entrusted to manage and distribute its contents called the grantor.
The grantor manages the trust during the grantor’s lifetime. Upon the grantor’s death, the successor trustee assumes control of the trust and must act in accordance with the terms of the trust, including the distribution of the trust’s assets to the designated beneficiaries of the trust. Since all the property contained in the trust is technically owned by the trust, the property is not subject to being probated.
Who controls the property in a living trust?
“If I set up a living trust, will I lose control of the property I transfer to the trust?”
No. A properly drafted living trust will make you both the trustee and the beneficiary during your lifetime. So you will retain the right to manage your property as trustee and keep all income earned as the lifetime beneficiary of the trust.
If you want to sell the property and spend the proceeds, or if you want to make an immediate gift of the property you have placed in the trust, you can always revoke the trust and have the property returned to you free of trust.
If you change your mind and want to add or change the names of those beneficiaries who will enjoy your property after your death, you can always amend your trust.
How do I transfer my property to the trust?
If you establish a living trust, you must adequately transfer the title of your property to the trust. With some kinds of property (real estate, securities, bank accounts, vehicles), for which you will need to prepare
For example, if you want to place your home or another real estate in trust, you must prepare a deed naming the trust as owner. With other assets that do not have title documents (furniture, paintings, collectibles, etc.), you can transfer the property to the trust by listing the property in the trust document.
What about the payment of taxes?
A living trust will not reduce your income taxes or any estate or gift taxes that might be due when you die.
If you name yourself the trustee for the trust, you will not need to obtain a taxpayer ID number for the trust, file trust tax returns, or keep separate tax records for the living trust.
You should, of course, keep track of any income that the trust property earns because you will need this information for your income tax return.
Whether married or not, couples can create their separate trust, but it is more common for them to create one shared living trust.
You and your spouse would transfer property that you own together (joint tenancy property and, in certain states, community property) to the trust. In addition, either or both of you could transfer the property you own to the trust.
These trusts will generally provide that either spouse can revoke the trust during the joint lifetimes of the couple.
During the joint lifetime of the couple, the income from the trust is usually distributed to the couple. After the first spouse passes, the surviving spouse receives all the trust’s income. Only after the second spouse’s death is the property distributed to the ultimate beneficiaries.
Do I need a will if I have a living trust?
Yes. In most cases, you will transfer your significant assets to the living trust, but chances are you will still own other property at your death. The most common example will be household items and any property you purchase or accumulate after you create the trust. To take care of the disposition of this “other property,” you should have a will.
What kind of lawyer do I need to create a living trust?
Suppose you have a sizable estate or have a complicated family situation (such as children from more than one marriage). In that case, you will probably be better off seeing an experienced estate planning and trust attorney.
An experienced estate and trust lawyer can help you structure your living trust to minimize both taxes and probate fees and see that your property goes where it is intended to go.
The estate and trust lawyer can also advise you of alternative devices to save money and increase your control over the property.
Locating An Estate And Trust Lawyer
Should you have specific questions or require additional information about your legal rights and obligations, we advise you to consult with a verified online Estate and Trust Lawyer about your issues as soon as possible.
