How to Create a Living Trust

Parisi, Coan & Saccocio, PLLC

What is a Living Trust?

A living trust is a legal document established during an individual’s lifetime where an appointed person, called the trustee, is tasked with managing that individual’s assets for the benefit of the named beneficiaries.

What is the Main Benefit of a Living Trust?

The main benefit of creating a living trust is to avoid probate. During probate assets are transferred out of the deceased person’s name into the name of the living. If the deceased left a valid Will, all relevant estate parties are notified, all estate property is identified and appraised, and creditors and taxes are paid. When all these items are completed, the court issues an Order distributing the property, and the estate is closed.

Unlike a valid Will, which helps move things more easily through probate, a living trust does not require probate. The living trust allows individuals to put their property and assets into a trust while they are alive and then transfer them upon their death, to their designated beneficiaries, effectively avoiding the probate process.

How Do You Create a Living Trust?

When creating a trust there are many options and variations to address each person’s situation and needs. However, we have created a basic checklist to guide you through the process of creating a trust document. If you are ready to create a Trust, would like more information, or have further questions after reading through this checklist please contact us for a free consultation at (914) 228-7448.

Checklist for Creating a Living Trust

  1. Create A List of Assets to Include in Your Trust

While you do not have to include all your assets in the trust, keep in mind that only assets included in the trust will be able to pass to you beneficiaries without going through probate. Types of assets that can be included in your trust include:

  • Real estate
  • Stocks
  • Personal property, such as jewelry and furniture
  • Bank accounts
  1. Collect and Organize Necessary Paperwork

To save time and ensure the process of funding your trust goes efficiently, collect, and organize and all necessary documents for the assets you plan to include in trust. Paperwork needed may include:

  • Titles
  • Deeds
  • Account Numbers
  • Stock Certificates
  1. Do You Need a Shared Trust or An Individual Trust?

Since you can only transfer property that you own into a trust, if you are married and own property jointly, you will likely need to consider a shared trust. Although you could form two separate trusts, joint trusts can make your estate planning much easier.

  1. Choose Your Beneficiaries

A trust's beneficiary is the person who will one day receive trust assets or benefit from the trust in some other way. Family members, loved ones, friends, and even charities can be named as trust beneficiaries. In addition to choosing your beneficiaries, also consider how you would like assets in the trust distributed, and any special provisions such as limiting a beneficiary’s spending or disbursing assets to certain beneficiaries over a period rather than all at once.

  1. Choose Your Successor Trustee

A trust’s successor trustee is the person tasked with overseeing your affairs should you become incapacitated or settling any estate debts and distributing assets according to your terms, after your death. If a minor child might inherit assets from your trust, you can also choose someone to manage those assets for them.

  1. Prepare the Trust Agreement

A trust agreement is the legal document that establishes the trust. Trusts must be well-planned and designed carefully to reduce the amount of taxes on their distributions. Trust law varies by state and can be very complicated. An experienced trust attorney can help you determine the type of trust you need, carefully structure it to meet the needs and goals of your individual situation and draw up the necessary documents including the trust agreement. Although there are do-it-yourself trusts available online, be aware they often do not offer legal advice and sometimes do not take into consideration changes in estate planning laws. Further, they often neglect areas such as guardianship of children, property that has appreciated in value, or large estates that are subject to estate taxes.

  1. Funding the Trust

Once the trust has been created, assets can then be transferred from the grantor’s name or joint names, into the ownership of the trust. When the grantor funds the trust, it ensures their assets will be managed according to the terms of the trust agreement.

How a trust is funded depends on the type of property in question. Generally, for titled property such as vehicles, the grantor may request a new title showing the living trust as the owner. For untitled property, an Assignment of Property document may be used to specify the trust as the owner.

Assets that can be used to fund a trust include:

  • Financial Accounts:
  • Real Estate
  • Beneficiary Accounts
  1. Keep Your Living Trust Current

A living trust is a part of your estate plan and should be reviewed and updated frequently, to ensure that major life events such as deaths, marriages, and divorces, as well as purchases of property and sales are addressed properly in your trust.

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