LIVING TRUSTS-WHAT YOU SHOULD KNOW
WHAT IS A LIVING TRUST?
Generally, a living trust is a contract or agreement in which you name someone to manage your property and assets. The person you name is called the trustee. You give the trustee directions in the trust agreement as to how you want your property and assets managed, and as to what should be done with them after your death. The trustee is legally obligated to follow your directions.
WHO CAN I NAME AS A TRUSTEE?
You can name yourself to be your own trustee and name a successor trustee to take over at your death or when you can no longer manage your own affairs. You can also name a trust company, a spouse, a business associate, an advisor, or other person or entity as trustee or successor trustee. It is possible to have more than one trustee if you like.
DOES A TRUST AVOID PROBATE?
Yes. Property and assets in your trust are not subject to Court supervised probate. After your death, the trustee takes care of giving the property and assets to the people and/or charities you have named in your trust. This is generally faster and less expensive than a probate proceeding. The key is that your property and assets need to be in the name of your trust.
IS A TRUST PRIVATE?
Yes. Only the people involved need to know what your trust says and what is in it. Many of them may not need to know until after your death. A trust is a confidential document. Everything in probate, on the other hand, is open to the public.
WHAT OTHER ADVANTAGES ARE THERE OF HAVING A TRUST?
You can put restrictions or conditions on how people receive your property and assets after your death. You say who gets what, when, and how they get it. You can also provide for management of your affairs if you become too ill, disabled, or elderly to look after yourself. This will help your family avoid costly court supervised guardianship during your illness. A trust agreement may also be written to provide estate tax savings in some circumstances.
CAN A TRUST BE CONTESTED AFTER MY DEATH?
Yes. Legally though, it is generally harder to break a trust than it is to break a Will. The contestants are the ones who have to hire the attorney and start the court action.
CAN I CHANGE MY TRUST AFTER IT IS WRITTEN?
Most living trusts are revocable, which means that you can change or terminate your trust at any time during your life. It is also possible to make a trust irrevocable, which means it cannot be changed. This is done sometimes for legal and tax purposes. Most people will not have use for an irrevocable trust.
DO I NEED A WILL IF I HAVE A TRUST?
If all of your property and assets are in your trust, you generally do not need a Will. However, it is usually a good idea to have a short Will to put into trust anything you have accidentally left out of it.
HOW DO I SET UP MY TRUSTS?
An attorney, licensed financial planner, CPA or bank trust officer may help you plan your trust and transfer property and assets into it. An attorney must draft your trust agreement and any related documents.
The Coleman Law Office utilizes the Living Trust for the majority of its estate planning clients.