Quick Overview of Living Trust Law
The Living Trust, as it is commonly called is, in fact, an Inter Vivos Trust which means the trust will exist only during the lifetime of the Trust Maker (Trustor). There is an exception to this lifetime provision when the trust is continued after the death of the Trustor for the benefit of one or more beneficiaries (heirs) by reason of age or other conditions. There are two types of Living Trust, “Revocable” and “Irrevocable.” A Revocable Living Trust is one that can be revoked at any time by the Trustor. The Irrevocable Living Trust is one that cannot be revoked without written consent of the beneficiaries. Even though the title to the trust property is in the name of the Trustee (usually the Trustor), no authority or power to control the property is lost since any action the Trustor could engage in as the sole owner of the property is readily available to her/her as the Trustee under the Terms of the Trust. In other words, a Living Trust is a vehicle that can be legally operated or legally aborted at the will of the Trustor or Trustors, while fully preserving an estate that will pass to his or her heirs without the necessity of a cumbersome and costly probate.
WHY SHOULD I HAVE A LIVING TRUST?
There are several reasons why a Living Trust is essential to good estate planning. However, the single most important reason why someone should have a Living Trust is to avoid probate! A Living Trust eliminates the need for your heirs or surviving spouse to be subjected to the agony and unnecessary cost of probate. A Living Trust further provides the entity to ensure that you either pay no estate and inheritance taxes or at least minimize those onerous taxes. In addition, a Living Trust establishes the means to provide for your needs in the event that you become incompetent. It can provide for the support and education of your minor children. It can further provide care for a handicapped child without jeopardizing his or her governmental benefits. A Living Trust can also insure what all people want-privacy of their financial affairs. When a will is probated, it is filed with the court. All court filings are considered public record which allows anyone to go to the court and view them. Since a Living Trust is not probated it never becomes a public record. Hence, no one can view the Trust without the Trustees permission.
HOW THE LIVING TRUST WORKS
A Living Trust means that you do not hold title to anything; since your assets are inside the Trust, the Trust holds title to everything. However, even though you have relinquished ownership of your assets, you still retain control of those same assets. As Trustee of your Trust, you continue to have the same power to buy, sell, transfer, borrow, and do whatever you wish with “your” assets. Your control of those assets is no different on the day after you put them into the Trust than on the day before you put them into the Trust. While you remain in control of those assets, remember, the Trust now owns them. The significance of your not “owning” anything becomes very important when you ultimately die. Upon your death, since you have nothing in title in your own name (because your assets are in the Trust), there is nothing to probate. If you are married, the surviving spouse typically becomes the surviving trustee and, as such, continues to have the same power to by, sell, transfer, or do whatever is desired with those assets. Normally, in the Trust you would identify whom you want to act as the Successor Trustee. The Successor Trustee is the person who will take charge of the Trust upon the death of the original Trustee(s). That person, or persons, will immediately step in, upon the death of the surviving Trustee, and have the same power to buy, sell, or transfer those assets and, more importantly, to use them and to distribute them as you would have wanted them used or distributed. Once the Successor Trustee takes over the Trust he/she or they or limited in what the can do only by what is enumerated in the Trust. They must distribute the assets exactly as the Trust directs them to. If the Trust is to continue it’s existence in the case of a minor child or children, the Trustee must manage the Trust until the assets are completely distributed to the minor child or children. When this happens is entirely up to the original Trustor. The Trustor can set any age of the child for the Trust to end.
IT’S YOUR CHOICE
Now that you are somewhat familiar with what a Living Trust is and how it works you now have a choice to make. You can either do nothing or you can have a Living Trust prepared specially for you and all necessary documents. Think for a moment about what you would leave behind if suddenly something happened to you tomorrow. Would things be simple for your family or heirs or would a myriad of problems arise for them? The choice is yours. Call for a free consultation: (858) 277-0232