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Living Trust - Single/Joint

What is a Trust?

A living trust is similar to a will in that you specify who your "stuff" goes to and who you put in charge to carry out your wishes, but it has the added benefit of eliminating the probate process. Eliminating the probate process will save a lot of time and money for your loved ones and avoid the state and the courts from getting involved.

A Living Trust can also be called by its common name, a "revocable living trust." It is called "revocable" because you can alter your estate plan anytime during your lifetime and even revoke the entire trust if you choose. It is described as "living" because the Living Trust estate survives you at death and will distribute your assets per your request in contrast to a Last Will and Testament, which only comes into existence at your death. It is a "trust" because it creates an entity into which assets can be placed for normal use during your lifetime and then be available for distribution to anyone you select after your death.

FEATURES OF LIVING TRUST

A will can accomplish the following:

  • Declaration and Articles of the trust - Creates the trust entity. The articles contain the names of your beneficiaries, details regarding distribution and names of who you have chosen as your successor trustees to settle your estate and carry out your wishes.
  • Pour Over Will - This is different than a last will and testament. The trust contains your property and instructions about where your property goes after your death, but because you are unlikely to put everything into your trust (rocking chair, household goods, checking account) the pour over will acts like a safety net or back up device. When you die, the will "catches" any forgotten asset and sends it to your trust.
  • Living Will - The legal document that states what kind of extraordinary medical efforts you do or do not want at the time of your death, such as whether or not you want to be kept on life support. It gives clear instructions to your loved ones and doctors on how to proceed once you cannot speak for yourself and must rely on others to take care of you.
  • Powers of Attorney for Health and Finance - These documents provide an opportunity to name someone else to make decisions on your behalf for financial and medical reasons. The person appointed for medical decisions will communicate with doctors. The financial power of attorney will handle your financial affairs in the event of illness.

BENEFITS OF A LIVING TRUST

  • Avoid the probate process.
  • The trust is simple to establish and, when carried out, makes it easy to transfer property after one passes away.
  • Maintains privacy: note that in a probate proceeding, notices are published in newspapers and anyone may view the court's record and obtain information about heirs (names, addresses and ages as well as details about the estate and what someone may be receiving).
  • Has the ability to avoid having to go through the court to set up a conservator ship for someone who cannot manage his or her own estate in the event of incapacity.

WHAT IS PROBATE?

Probate is the costly, time-consuming process that requires:

  • Notifying the Court of a person's death
  • An inventory of the deceased person's property and appraising its value
  • Paying the deceased person's debts and taxes
  • Providing to the Court the validity of the deceased person's Last Will and Testament
  • Waiting to distribute the remainder of the deceased person's property

It doesn't really make a difference when a person dies and does not; in fact, leave a Last Will and Testament. The result will be that all the probate steps listed above will simply occur normally; with the exception being that the deceased person's property (after probate) will be distributed to his family according to state law.

People often feel having a Last Will and Testament is important for estate planning purposes. The sole purpose of a Last Will and Testament is for you to state your wishes about the distribution of your property after your death. It will incur probate fees, which could be avoided by replacing your Last Will and Testament with a Living Trust. The Living Trust provides probate avoidance and greater flexibility during your lifetime.

Probate can be a long, expensive process that simply does not have to occur. Death is a difficult time for everyone concerned and the family should not have to be forced through the unnecessary agony of probate.

FUNDING A TRUST

You are the settlor of the trust - meaning simply that the trust belongs to you. You also manage the assets which are placed into the trust. Establishing a Living Trust enables an individual to manage the trust during their lifetime and to transfer property to the trust without giving up control.

After your death, your "successor trustee" takes over the management of the trust assets. This is the person you have designated to administer and manage the trust after you die.

Transferring assets to the trust is called "funding" the trust. A funded Living Trust is one in which you (the settlor) have transferred ownership of your major assets to the trust. You may have a great trust, but it will remain "unfunded" until you transfer your assets into it.

Transferring your assets into your trust is actually quite simple. With a deed, for example, you transfer your real property from your "current ownership" into your new "trust." You also simply contact your bank or other institutions where you hold assets to rename your assets and accounts as now belonging to your trust. Let them know you need to change the name on your account(s) to reflect the trust name.

ADDITIONAL DOCUMENTS FOR THE PEOPLE CAN PREPARE TO FUND A TRUST

  • Quit Claim Deed / Warranty Deed - The document used to transfer title in real estate into name of the trust. Recorded in the county office that houses the property records where the property is located. Usually county recorders office or land registry office.
  • Mobile Home Transfer - You will need to change the title on your mobile home from your name to the name of the trust. This paperwork gets processed through the Department of Housing or Department of Motor Vehicles in the county where the mobile home is located.
  • Assignment of Deed of Trust - A document that can transfer interest you have in a deed of trust to a living trust. If you loaned money to a person or business and signed a deed of trust, the person who has to pay you back would still pay your trust back if you died.
  • Assignment of Business Interest - A document used to transfer business interest for a small business by a sole proprietor.

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