Establishing a living trust can help ensure that finances and estates will be distributed according to the creator of the trust’s wishes after their passing. Here are the basics of living trusts and how to begin the process.
What is a Living Trust?
A living trust is similar to a will in that it outlines what will happen to possessions, finances, businesses, and anything else a person owns when they pass away. A living trust is a legal entity that a person’s assets are transferred to, allowing individuals to direct the management and distribution of anything the trust covers. Because the trust itself legally owns the assets, the assets can be transferred without going through the probate law process.
Determining the Type of Trust
There are multiple types of living trusts, so one must first determine which type best suits their needs. The two main types are revocable and irrevocable trusts. Revocable trusts are much easier to navigate, as they can allow the creator of the trust, called the “grantor,” to retain complete control of their assets and property for the duration of their life. An irrevocable trust, on the other hand, requires permission from everyone named in the trust before it can be modified. In addition, married couples must decide whether to use two single trusts or opt for a joint trust, which may be easier for those with joint properties or bank accounts.
Before contacting a lawyer, the grantor should take inventory of all of the assets that they want to be transferred to the trust. This includes savings accounts, real estate, vehicles, stocks, and family heirlooms. They should bring any paperwork related to these assets to the initial meeting, including home deeds, car titles, and stock ownership certificates.
Select a Trustee
Before a living trust can be completed, the grantor must name a trustee, who will be responsible for managing the assets in the trust. The grantor may choose themselves to be the trustee, which is common in revocable trusts. However, if they choose this option, they must also select a successor trustee to take over management of the trust after their passing. This successor will be responsible for ensuring that all assets in the trust are properly distributed to the beneficiaries according to the instructions laid out in the trust.
Creating the Trust
After deciding which assets to transfer to the trust and selecting a trustee, the grantor can create the trust document with the help of an attorney and sign it in front of a notary public. After this final step, assets can be transferred into the trust.
In Florida, establishing a living trust has many financial and logistical benefits. For more information about the estate planning process, call Doran Sims Wolfe & Yoon at 386-253-1111 for a free consultation.