A revocable living trust is an estate planning tool designed to avoid probate while providing long-term property management. Living trusts are also referred to as inter vivos trusts. The term "revocable" means that you may revoke or terminate the living trust at any time. A "living" document is a document which you may continually edit and update.
A living trust generally involves three "persons" in its creation and administration: (1) a settlor or grantor who creates the trust; (2) a trustee who administers and manages the trust and its assets; and (3) a beneficiary who receives the benefit of the administered property in the trust.
The trustee of a trust makes all of the decisions for the trust and maintains complete control over all property placed in the trust. Control over living trust assets is accomplished by appointing yourself the "trustee". You will also appoint a successor trustee, who, upon your demise, will distribute the property in your living trust as specified, without probate. The role of a successor trustee is to assume the duties of the trustee when a predetermined event such as incapacity, disability or death occurs. In the event of incapacity or disability, other documents such as a living will, health care proxy and power of attorney will be needed. Take the time to review a comprehensive living trust kit. Upon the demise of the trustee, the successor trustee passes revocable living trust property quickly and confidentially to the beneficiaries without probate.
A living trust must contain assets for the benefit of one or more beneficiaries. Placing property in the trust is called "funding the trust". Most valuable assets should be transferred into your living trust but you may fund the trust with as much or as little as you wish. Though there are many types of property that can not be placed in your living trust, you can transfer real estate (including homes), business interests, money market accounts, stocks, bonds, mutual funds, precious metals, gems, antiques, artwork, royalty contracts, patents, copyrights, numismatic as well as other valuable collections and business interests into your trust. See a list of allowed living trust assets.
Executing a Declaration of Trust form establishes your living trust and sets forth its terms and conditions. After transferring assets to your living trust (with you as trustee), you then administer the assets for your own benefit and the beneficiaries, however, beneficiaries get no distributions during your lifetime.
Revocable Living Trust Forms
Assets not transferred to a living trust are subject to probate. Probate is the legal process by which assets are transferred to the beneficiaries listed in a last will and testament or, when there is no last will, as dictated by law. Probate can tie up assets for an extended period of time, usually a minimum of six months. Assets subject to probate are public knowledge and come under the scrutiny of the court.
Most living trusts are accompanied by a Pour-over Will. This type of last will and testament is configured to "pour" your remaining assets into your trust. Like any last will and testament, a Pour-over Will requires a probate proceeding, however, in many states a small estate procedure can be used in lieu of probate if the property is valued at less than $100,000.
Living trusts do not provide benefits to all people. For instance, a young couple, without children, planning to leave their assets to each other in the event of death would not gain a significant benefit from a living trust. Also, anyone without significant assets or that wants court supervision of their estate would not benefit from a living trust. In general, the greater the value of one's assets the more he or she benefits from a revocable living trust.
NUPP Legal living trust forms include completed examples and instructions. In addition, the trust accommodates all types of beneficiaries, including minor children. [Living Trust FAQ].