What Is a Living Trust?
A living trust is a legal arrangement that allows you to transfer your assets to your loved ones according to your wishes while avoiding the time and expense of probate. In simple terms, you create the trust and transfer ownership of your assets into it, continuing to manage them yourself as the trustee.
When setting up your living trust, you’ll name your beneficiaries—the people who will receive your assets—and appoint a successor trustee, the person who will carry out your instructions when you’re no longer able to do so.
Upon your death, the assets in your trust will be distributed directly to your chosen beneficiaries.
If you become incapacitated or prefer not to manage the trust yourself, your successor trustee can step in to manage the assets on your behalf and later distribute them according to your wishes.
Benefits of Having a Living Trust
A living trust offers numerous advantages when it comes to managing and protecting your estate.
Simplicity for Your Heirs: Your loved ones can avoid the lengthy, often confusing probate process and receive their inheritance with greater ease and peace of mind.
Privacy: Unlike the probate process, which makes your estate a matter of public record, a living trust keeps your financial affairs private.
Efficiency: Assets held in a trust can be transferred quickly and easily to your heirs, without the delays often associated with probate.
Continuity: If you or your spouse become incapacitated, your designated successor trustee can step in immediately to manage your affairs—handling bills, financial accounts, and dealings with social security or insurance agencies.
Funding Your Living Trust
After signing and notarizing your living trust, the next crucial step is funding your trust, which means transferring ownership of your assets into the trust.
- Real Property: We’ll assist in transferring ownership of your home and any other real estate into your trust by preparing and recording the necessary deeds.
- Accounts and Other Assets: For your bank accounts, investments, and other assets, you’ll need to contact your financial institutions to update the titles, transferring them from your personal name to the name of your trust.
Once completed, your trust becomes the rightful owner of these assets. Without this step, the trust remains just a legal document with no real effect.
What Assets Should Be Placed in a Trust?
- Bank accounts and real estate should be included in your trust.
- Investment assets, such as stocks, bonds, LLCs, and even cryptocurrency, should also be transferred to the trust.
What Should Not Be Included in Your Trust?
- Life insurance policies are not typically placed in a trust.