A living trust is a document that names specific persons to be the legal beneficiaries of your properties once you die or are incapacitated. It gives you the full hand to distribute and enter your properties into a trust. Reduction of estate taxes and non-involvement of probate are two of the advantages of having a living trust. If you want to create your living trust, the following are the things you should do to prepare.
- Make a list of all your assets and properties. Before you write a living trust, it is important that you first list all assets and properties you want to be included in the trust. These can include real estate properties, jewelry, vehicles, bonds, insurance, and cash. Then, gather all the documents, papers, and titles of each of the assets and properties.
- Determine your trustee. The trustee is the person who will have the full control of the trust management and distribution of the assets and properties. While you can assign yourself as the trustee, you can also name another person as your successor trustee who will take over at the event of your death or incapacitation. You can elect your spouse, child, or any person you fully trust.
- Name your beneficiaries. Decide who your beneficiaries will be, to whom you want to transfer the ownership of your assets and properties. Your beneficiaries may include family, relatives, friends, organizations, and charities. When you decide on your beneficiaries, determine whether you want to include special conditions before a beneficiary can fully own an asset or property. For instance, determine if you want a beneficiary to reach a certain age before passing on to his name a real estate property.
- Fund the living trust. In creating a living trust, funding means transferring the assets and properties into the trust. Therefore, if you are putting a real estate property into the trust, you have to transfer the property into the beneficiary’s name. In the same way, you have to deliver cash if you included cash into the trust. Failure to fund the living trust will make the document invalid.
- Find a good lawyer. Some can make do with service companies to help them through the creation of a living trust. But it is a much safer practice to hire a good lawyer to assist you. In the first place, many states require living trusts to be made with the supervision of a lawyer. Make sure to look for a reputable and experienced lawyer. Since it involves a great deal of money, making a living trust is relatively a sensitive process. So naturally, you want to entrust the transfer of your assets and properties with the experienced and professional guidance of a competent lawyer.
Keep in mind that living trust falls into two categories: revocable and irrevocable. A revocable living trust can be modified and cancelled any time, while an irrevocable living trust can’t be revoked. Talk with your lawyer about the legal implications of the said types of a living trust before writing your own.