If you are not familiar with legal terms and if you haven’t seriously thought about your will and other, similar documents, you may not know what a living trust is. A living trust is a binding legal document that you create while still alive for one of two reasons: to avoid probate, or to save money when it comes to taxes. Creating a living trust also guarantees that your properties will not go to probate proceedings, saving your heirs a great amount of time and trouble. You’ll also help protect your financial privacy and set out guidelines for the distribution and use of any assets if you become unable to handle matters yourself. A living trust may be revoked by the creator, also called the Grantor, at any time.
The main reason you may want to create a living trust is so that your heirs can take possession of your assets and property without dealing with probate. This will save them money and time, plus none of your records will be made public (all probate records are open to the public). A living trust, like a living will or power or attorney, can also give certain legal powers to the trustee or executor in the event of disability or incapacity.
Creating a living trust is fairly simple. The grantor transfers the title of his/her assets to the trustee of the trust (which in many cases is actually the same person) by signing a declaration of trust document, which is similar to a will. The trustee then has the power to administer the benefits of the assets. A living trust can also name others who will take over as trustees when the grantor dies. Until then, however, these beneficiaries receive no benefits from the trust. If the trust is very large, a corporate trustee like a bank may be used. This type of trustee can exist in perpetuity, unlike an individual trustee. Generally, the process of creating a living trust doesn’t take more than a week or two. The living trust is terminated when all property named in the trust has been transferred to the named beneficiaries.
It is prudent to consult an estate attorney when thinking about creating a living trust.