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What is a Living Trust?
A Living Trust is a trust created by a person (the "grantor") for use during that person's lifetime. It provides for payments of income for that person and the distribution of the remaining assets of the trust upon that person's death. Although they sound complicated, Living Trusts are rather simple.
Essentially, assets are put into a "trust" and a person is designated to manage those assets for the person who benefits from that trust. The person who manages the trust could be the person who made the trust (the grantor), someone else (a "trustee") or even a paid professional. Living Trusts can also be amended or revoked at any time by the grantor.
An advantage of a Living Trust, also known as Revocable Living Trust, is that it does not have to go through the standard probate process, so funds can be distributed to cover your death expenses or to care for minors or disabled family members. It also may be able to make funds and assets available more quickly than a will. Get started on yours now with Rocket Lawyer!
When to use a Living Trust:
- You have assets you want to be distributed quickly upon your death or incapacitation.
- You have assets you want dispersed privately.
- You want to appoint a person or professional trustee to manage the assets held in the trust.
Note: This trust template is not appropriate for individuals whose estate exceeds the federal estate tax exclusion limit. But this form is suitable for most with an average net worth.
Sample Living Trust
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This Living Trust Agreement (this "Agreement"), dated , between (the "Grantor") of , and
In consideration of the mutual covenants and promises set forth in this Agreement, the Grantor and the Trustee agree as follows:
. PURPOSE. The purpose of this Agreement is to establish a Trust to receive and manage assets for the benefit of the Grantor during the Grantor's lifetime, and to further manage and distribute the assets of the Trust upon the death of the Grantor.
. NAME. The trust created hereby shall be known as the " dated ." The assets and dealings of the Trust may, however, be held and conducted in the name of the Trustee and, to the extent otherwise permitted herein, also in the name of a nominee.
. FUNDING OF TRUST. Grantor has transferred, assigned, conveyed and delivered to the Trustee the property described in Schedule A attached and made a part hereof; and said property and any and all other property which may be hereafter assigned, conveyed and delivered to said Trustee by the Grantor or another person as hereinafter provided, is intended to constitute the trust estate and to be held by the Trustee IN TRUST for the uses and purposes and subject to the terms and conditions hereinafter set forth.
Grantor or any other person, with the consent of the Trustee, may at any time or from time to time deed, grant, devise, bequest, gift or otherwise, cause additional property to be transferred to and administered as a part of the trust estate created hereunder. Any such transfer may be evidenced by the receipt of the Trustee, and each such receipt shall be conclusive evidence of the consent of said Trustee to the transfer thereof.
. MANAGEMENT OF TRUST ASSETS. The Trustee shall manage and distribute the Trust assets for the benefit of the Grantor and the Grantor's successor(s) in interest in accordance with the terms of this Agreement.
. PAYMENTS DURING THE GRANTOR'S LIFETIME. During the Grantor's lifetime, the Trustee shall pay all of the net income of this Trust, and also such sums from principal as the Grantor may request, to or for the benefit of the Grantor, or as the Grantor may designate. Such payments shall be made at least . The Grantor may change the amount of the payments at any time by providing written notice to the Trustee. Any excess income not distributed at Grantor's death shall be added to principal at the discretion of the Trustee.
A. Payments During a "Disability" of the Grantor. During any period that the Grantor has a "disability", the Trustee may pay to or for the benefit of the Grantor such amounts of income and principal as the Trustee believes in the Trustee's sole discretion to be required for (i) the Grantor's support, comfort and welfare, (ii) the Grantor's accustomed manner of living, or (iii) any purpose that the Trustee believes to be in the best interest of the Grantor. Furthermore, in the event of illness or other disability of Grantor, the Trustee may, in lieu of making payment of such income directly to the Grantor, use and apply for the benefit of the Grantor so much of such income and also the principal of the Trust estate for the proper care, comfort, medical or surgical attention, maintenance and support of Grantor. The Trustee, in such discretion, may pay over to any relative or legal guardian of the Grantor, all or any portion of such income or principal for any of said purposes in lieu of using and applying said funds for the benefit of Grantor.
B. Disability Defined. For the purposes of this Trust, "disability" shall mean a legal disability or the inability to provide prompt and intelligent consideration to financial matters by reason of illness or mental or physical disability. The determination of whether the Grantor has a disability shall be made by the Grantor's most recent attending physician. The Trustee shall be entitled to rely on written notice of that determination.
. DEATH OF THE GRANTOR. Upon the death of the Grantor, and after the payment of the Grantor's just debts, funeral expenses, and expenses of last illness, the following distributions shall be made:
However, such distributions (other than distributions, if any, to the Grantor's spouse) shall be made only if the Grantor's spouse, , does not survive the Grantor.However, such distributions (other than distributions, if any, to the Grantor's spouse and the Grantor's children) shall be made only if the Grantor's spouse, , and the Grantor's children do not survive the Grantor.However, such distributions (other than distributions, if any, to the Grantor's children) shall be made only if the Grantor's children do not survive the Grantor.However, such distributions (other than distributions, if any, to the Grantor's spouse) shall be made only if the Grantor's spouse, , does not survive the Grantor.However, such distributions (other than distributions, if any, to the Grantor's children) shall be made only if the Grantor's children do not survive the Grantor.
to the Grantor's spouse, . If the Grantor's spouse does not survive the Grantor, the tangible personal property shall be distributed to the Grantor's children in equal shares. If a child does not survive the Grantor, such deceased child's share shall be distributed in equal shares to the children of such deceased child who survive the Grantor, by right of representation. If a child does not survive the Grantor and has no children who survive the Grantor, such deceased child's share shall be distributed in equal shares to the Grantor's other children, if any, or to their respective children by right of representation. If no child of the Grantor survives the Grantor, and if none of the Grantor's deceased children are survived by children, the Grantor's tangible personal property shall be distributed to of , . If this person does not survive the Grantor, the tangible personal property shall be distributed to the following beneficiaries in the percentages as shown:
to the Grantor's spouse, . If the Grantor's spouse does not survive the Grantor, the tangible personal property shall be distributed to the following beneficiaries in the percentages as shown:to of , . If this person does not survive the Grantor, the tangible personal property shall be distributed
to the Grantor's children in equal shares. If a child does not survive the Grantor, such deceased child's share shall be distributed in equal shares to the children of such deceased child who survive the Grantor, by right of representation. If a child does not survive the Grantor and has no children who survive the Grantor, such deceased child's share shall be distributed in equal shares to the Grantor's other children, if any, or to their respective children by right of representation. If no child of the Grantor survives the Grantor, and if none of the Grantor's deceased children are survived by children, the Grantor's tangible personal property shall be distributed to of , . If this person does not survive the Grantor, the tangible personal property shall be distributed to the following beneficiaries in the percentages as shown:
to of , . If this person does not survive the Grantor, the tangible personal property shall be distributed to the following beneficiaries in the percentages as shown:distributed proportionately to the other distributee(s) listed under this provision.distributed with the residuary assets of this Trust.
The custodian (whether trustee or guardian) of my assets may transfer all or part of the custodial property to a qualified minors trust without court order provided that the trust meets the requirements of Internal Revenue Code section 2503(C).
The shares shall be distributed to the Grantor's surviving children (and/or surviving descendants, in the case of a deceased child, by right of representation) and this Trust shall then terminate.
1. With respect to each share provided for a child of the Grantor then living:
a. Because each child has attained the age of years, each child shall have the right, by written request, to withdraw one-third in value of the remaining assets of such child's share then being held in trust.
b. Each child who has attained the age of years, and each remaining child upon attaining such age, shall have the right, by written request, to withdraw one-half in value of the remaining assets then being held in such child's share.
c. Each child who has attained the age of years, and each remaining child upon attaining such age, shall have the right, by written request, to withdraw the remaining assets then being held in such child's share, and if that child does so withdraw the remaining assets, the Trust as to that share shall terminate.
d. The withdrawal rights described in paragraphs (a) and (b) shall be cumulative, so that if the child has already attained the age specified in paragraph (b) at the time the Trust is divided into shares, the child shall have the right to withdraw a total of two-thirds in value of the remaining principal then being held in that child's trust share. However, in the event that the child does not make a request for a distribution within six months after attaining eligibility to do so, the amount of such distribution shall not be distributed by the Trustee except as either (i) a part of the next succeeding distribution, or (ii) as provided in paragraph (e).
e. Prior to final distribution to each child, as provided in this section, the Trustee shall pay to each child such sums from the income or principal of that child's share as the Trustee deems advisable for such child's health, education, support, and maintenance. Any income not distributed shall be added to principal.
f. If a child of the Grantor dies before receiving full distribution of such child's share, the remainder of such child's share shall be distributed by right of representation to such child's descendants, if any, or if none, by right of representation to the Grantor's descendants. Each portion distributable to a descendant of the Grantor for whom a share of this Trust is being held shall be distributed to the Trustee of that share and become a part of that share.
2. With respect to each share provided for the then living descendants, collectively, of a deceased child of the Grantor, the Trustee shall distribute that share by right of representation to the descendants of the deceased child.
3. If no child of the Grantor survives to age years, and if none of the Grantor's children have surviving descendants, the Trustee shall distribute the remaining Trust assets in the manner set forth in the paragraph "No Surviving Descendants."
4. Upon the death of a trust beneficiary under the circumstances contemplated by this section ("Use and Distribution"), the Trustee, in the Trustee's discretion, may pay the expenses of last illness, funeral, and related expenses of such deceased beneficiary from Trust assets.
5. Whenever income or principal is to be used for the benefit of a person under the age of eighteen (18) years or a person who in the judgment of the Trustee is incapable of managing such person's own affairs, the Trustee may make payment of such property in any or all of the following ways:
a. By paying such property to the parent, guardian, conservator, or other person having the care and control of such person for such person's benefit or to any authorized person as custodian for such person under the Uniform Transfers to Minors Act or equivalent legislation.
b. By paying such property to the guardian, conservator or other person having the care and control of any incapacitated person.
c. By paying directly to any such beneficiary such sums as the Trustee may deem advisable as an allowance.
d. By expending such property in such other manner as the Trustee in its discretion believes will benefit any such beneficiary.
the following beneficiaries in the percentages as shown: :- the Grantor's heirs-at-law, their identities and respective shares to be determined under the laws of the , then in effect, as if the Grantor had died intestate at the time fixed for distribution under this provision.
- the Grantor's spouse's heirs-at-law, their identities and respective shares to be determined under the laws of the , then in effect, as if the Grantor's spouse had died intestate at the time fixed for distribution under this provision.
% - the Grantor's heirs-at-law, their identities and respective shares to be determined under the laws of the , then in effect, as if the Grantor had died intestate at the time fixed for distribution under this provision.
% - the Grantor's spouse's heirs-at-law, their identities and respective shares to be determined under the laws of the , then in effect, as if the Grantor's spouse had died intestate at the time fixed for distribution under this provision.
% - Total Percentage.
% - Total Percentage.
, or if required by state law, twenty-one (21) years from the date of my death; provided, however, if does not qualify as an organization exempt from federal income tax under 501(c)(3) of the Internal Revenue Code of 1986, as amended, then my trustee shall select an appropriate tax-exempt organization that provides for the care of similar pets to receive such distribution. TRUSTEE POWERS. The Trustee, in addition to other powers and authority granted by law or necessary or appropriate for proper administration of the Trust, shall have the following rights, powers, and authority without order of court and without notice to anyone:
. Receive Assets. To receive, hold, maintain, administer, collect, invest and re-invest the trust assets, and collect and apply the income, profits, and principal of the Trust in accordance with the terms of this instrument.
. Receive Additional Assets. To receive additional assets from other sources, including assets received under the Will of the Grantor or any other person.
. Standard of Care. To acquire, invest, reinvest, exchange, retain, sell, and manage estate and trust assets, exercising the judgment and care, under the circumstances then prevailing, that persons of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds, considering the probable income as well as the probable safety of their capital. Within the limitations of that standard, the Trustee is authorized to acquire and retain every kind of property, real, personal or mixed, and every kind of investment, specifically including, but not by way of limitation, bonds, debentures and other corporate obligations, and stocks, preferred or common, that persons of prudence, discretion and intelligence acquire or retain for their own account, even though not otherwise a legal investment for trust funds under the laws and statutes of the United States or the state under which this instrument is administered.
. Retain Assets. To retain any asset, including uninvested cash or original investments, regardless of whether it is of the kind authorized by this instrument for investment and whether it leaves a disproportionately large part of the estate or trust invested in one type of property, for as long as the Trustee deems advisable.
. Dispose of or Encumber Assets. To sell, option, mortgage, pledge, lease or convey real or personal property, publicly or privately, upon such terms and conditions as may appear to be proper, and to execute all instruments necessary to effect such authority.
. Settle Claims. To compromise, settle, or abandon claims in favor of or against the Trust.
. Manage Property. To manage real estate and personal property, borrow money, exercise options, buy insurance, and register securities as may appear to be proper.
. Allocate Between Principal and Income. To make allocations of charges and credits as between principal and income as in the sole discretion of the Trustee may appear to be proper.
. Employ Professional Assistance. To employ and compensate counsel and other persons deemed necessary for proper administration and to delegate authority when such delegation is advantageous to the trust.
. Distribute Property. To make division or distribution in money or kind, or partly in either including disproportionate in-kind distributions, at values to be determined by the Trustee, and the Trustee's judgment shall be binding upon all interested parties.
. Enter Contracts. To bind the Trust by contracts or agreements without assuming individual liability for such contracts.
. Exercise Stock Ownership Rights. To vote, execute proxies to vote, join in or oppose any plans for reorganization, and exercise any other rights incident to the ownership of any stocks, bonds or other properties of the Trust.
. Duration of Powers. To continue to exercise the powers provided in this Agreement after the termination of the Trust until all the assets of the Trust have been distributed.
. ADDITIONAL TRUSTEE PROVISIONS. These additional provisions shall apply regarding the Trustee.
A. Grantor as Trustee. If at any time the Grantor is the Trustee, the Grantor may appoint a successor Trustee, to become effective immediately or upon any stated contingency, by making such designation in writing. Such designee shall become the successor Trustee upon acceptance of the terms and conditions of this Agreement.
B. Successor Trustee. to serve with bond. to serve without bond. to serve with bond. to serve without bond. to serve with bond. to serve without bond. to serve with bond. to serve without bond. Such designee(s) shall become the successor Trustee(s) upon acceptance of the terms and conditions of this Agreement.
C. Resignation of Trustee. Any Trustee may resign by giving written notice to the beneficiaries to whom income could then be distributed. Such resignation shall take effect on such date specified in the notice, but not earlier than thirty (30) days after the date of delivery of such written resignation unless an earlier effective date shall be agreed to by the income beneficiaries.
D. Adult Beneficiary Rights. If the Trustee resigns or for any reason ceases to serve as Trustee, and if the successor Trustee(s) designated by the Grantor, if any, fail or cease to serve as Trustee, then the adult beneficiaries to whom income could then be distributed, together with the adult beneficiaries to whom principal would be distributed if the Trust were then to terminate, may by majority action in writing appoint a successor Trustee. If agreement of a majority of the beneficiaries cannot be obtained within sixty (60) days, a successor Trustee shall be appointed by the court having general jurisdiction of the Trust. Any successor Trustee appointed shall have all the rights conferred upon the original Trustee and shall be bound by the provisions of this Trust.
E. Accounting. The Trustee shall provide an accounting to the Beneficiary (or beneficiaries) on at least a(n) basis. If a beneficiary has a "disability", the Trustee shall provide the accounting to a guardian or conservator, if any.
F. Bond.
. REVOCATION OR AMENDMENT. During the Grantor's lifetime, the Grantor may revoke at any time, and/or the Grantor may amend, this Agreement by delivering to the Trustee an appropriate written revocation or amendment, signed by the Grantor. If the Trustee consents, the powers of revocation, but not the power of amendment, may be exercised by a duly appointed and acting attorney-in-fact for the Grantor for the purpose of withdrawing assets from the Trust.
. GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the .
. PERPETUITIES SAVINGS CLAUSE. Despite any other provision of this Agreement to the contrary, the trust created by this Agreement shall terminate no later than 21 years after the death of the last surviving beneficiary of this Agreement who is living at the time of the death of the Grantor, at the end of which time distribution of all principal and all accrued, accumulated and undistributed income shall be made to the persons then entitled to distributions, in the manner and proportions herein stated free of trust.
. SEVERABILITY. If any portion of this Agreement shall be held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable. If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.
. MISCELLANEOUS PROVISIONS.
. Paragraph Titles and Gender. The titles given to the paragraphs of this Trust are inserted for reference purposes only and are not to be considered as forming a part of this Trust in interpreting its provisions. All words used in this Trust in any gender shall extend to and include all genders, and any singular words shall include the plural expression, and vice versa, specifically including "child" and "children", when the context or facts so require, and any pronouns shall be taken to refer to the person or persons intended regardless of gender or number.
predeceased the death of the Grantor's spouse, and notwithstanding any other provision of this Trust, the Grantor's spouse (or the Grantor's spouse's estate as the case may be) shall receive the distribution to which the Grantor's spouse would otherwise be entitled to receive without regard to a survivorship requirement, if any.survived the death of the Grantor's spouse.The Grantor is married to and all references in this Trust to "the Grantor's spouse" are references to . The Grantor is married to and the failure of this Trust to provide for any distribution to is intentional.The Grantor is not currently married to anyone.The Grantor does not have any children at the time of the signing of this Trust. All references in this Trust to "the Grantor's child" or "the Grantor's children" include any children born to or adopted by the Grantor after the signing of this Trust.The name of the Grantor's child is .The names of the Grantor's children are:
., and any other children born to or adopted by the Grantor after the signing of this Trust.
is intentional.
____________________________________
| Signature: | , Grantor |
STATE OF
COUNTY OF
| Notary Address: | ____________________________________ |
| ____________________________________ |
| ____________________________________ |
| ____________________________________ |
STATE OF
COUNTY OF
DISTRICT OF COLUMBIA
, having first been duly sworn, did depose and say that he/she is the of , and , having first been duly sworn, did depose and say that he/she is the of , and , and , known to me to be the person described in and who executed the foregoing instrument as Trustee and acknowledged that he/she executed the same (in his/her authorized capacity) as his/her free act and deed.known to me to be the persons described in and who executed the foregoing instrument as Co-Trustees and acknowledged that they executed the same (in their authorized capacity) as their free act and deed.| Notary Address: | ____________________________________ |
| ____________________________________ |
| ____________________________________ |
| ____________________________________ |
COUNTY OF
PARISH OF
| Notary Address: | ____________________________________ |
| ____________________________________ |
| ____________________________________ |
| ____________________________________ |
COUNTY OF
PARISH OF
, having first been duly sworn, did depose and say that he/she is the of , and , having first been duly sworn, did depose and say that he/she is the of , and , and , known to me to be the person described in and who executed the foregoing instrument as Trustee and acknowledged that he/she executed the same (in his/her authorized capacity) as his/her free act and deed.known to me to be the persons described in and who executed the foregoing instrument as Co-Trustees and acknowledged that they executed the same (in their authorized capacity) as their free act and deed.| Notary Address: | ____________________________________ |
| ____________________________________ |
| ____________________________________ |
| ____________________________________ |
COUNTY OF
PARISH OF
COUNTY OF
PARISH OF
, having first been duly sworn, did depose and say that he/she resides at , , and that he/she is the of , and , having first been duly sworn, did depose and say that he/she resides at , , and that he/she is the of , and , and , known to me to be the person described in and who executed the foregoing instrument as Trustee and acknowledged that he/she executed the same (in his/her authorized capacity) as his/her free act and deed.known to me to be the persons described in and who executed the foregoing instrument as Co-Trustees and acknowledged that they executed the same (in their authorized capacity) as their free act and deed.
STATE OF
COUNTY OF
On this _____ day of ____________________, ______, before me, ________________________________, personally appeared , known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same as Grantor for the purposes therein contained.
In witness whereof I hereunto set my hand and official seal.
____________________________________
Notary Public
____________________________________
Title (and Rank)
My commission expires ________________
STATE OF
COUNTY OF
On this _____ day of ____________________, ______, before me personally appeared
In witness whereof I hereunto set my hand and official seal.
____________________________________
Notary Public
____________________________________
Title (and Rank)
and and and and , , the of , , , the of , , , the Grantor, , , the Grantor, the Trustee, the Trustees| By: |
________________________________________
(Trustee)
| By: |
________________________________________
(Witness)
by , a trustee who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , who is the of , a trustee who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , a trustee who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , who is the of , a trustee who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , a witness who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , a witness who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , a witness who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , a witness who is personally known to me or who has produced ______________________________ (type of identification) as identification, by , a witness who is personally known to me or who has produced ______________________________ (type of identification) as identification,
Schedule A
List of Assets to be Held by the Trustee
The Grantor has transferred, assigned, conveyed and delivered to the Trustee the following assets to be held, managed and distributed under the terms of this Living Trust as described above:
Name:
Value:
Description:
The Affidavit should be signed in front of a notary public. It becomes effective as of the date signed.
The Living Trust should be signed by in the presence of three DISINTERESTED adult witnesses and a notary public. The signature of a third witness provides some protection against the possibility that one of the witness' signature will be invalid for some reason. For example, a person should not be a witness if that person is a beneficiary under the Living Trust. In most states, if a beneficiary's signature is counted in order to satisfy the minimum number of witnesses, then the Living Trust is not necessarily invalidated, but that "interested witness" may not receive a share of the estate any larger than if the Grantor had died without a trust or a will.
All of the witnesses must watch sign this Living Trust. should verbally declare that the document is intended to be his or her Living Trust, but the witnesses need not read the Living Trust or know of its contents.
Each witness must sign his or her name with and the other witnesses present. The witnesses should be satisfied that willingly signed the document as a free and voluntary act, and that was of full age and sound mind.
The Living Trust is not valid unless it is signed by a Grantor who is of "sound mind" and of the minimum age for this state. In most states, the minimum age is eighteen. Some states permit an individual below the minimum age to sign a Living Trust if the person is married or in the military. Being of "sound mind" requires that the Grantor: (a) know that he or she is signing a Living Trust, (b) know the general nature and extent of his or her property, and (c) know the descendants or other relatives that would ordinarily be expected to share in the estate.
Attachments
The Florida Self-Proving Affidavit is a document which should be attached to the end of the Living Trust, and which contains 's acknowledgment and the affidavit of the witnesses, made before a person authorized to take acknowledgments and administer oaths. The affidavit recites that the requisite formalities were observed in signing the Living Trust. Although attaching the affidavit has nothing to do with the legality of the Living Trust itself, it can speed the admission of the Living Trust to probate (if necessary) after the Grantor's death because it eliminates the need to have a witness appear at the probate proceeding to testify that the formalities in signing the Living Trust were followed. The witnesses may not be available later when they are needed. A self-proved Living Trust may be admitted to probate without additional witnesses or affidavits, but it is still subject to contest on such grounds as undue influence, lack of testamentary capacity, or prior revocation.
When to Consult a Lawyer
If is unable to sign due to physical disability, another person may be able to sign on behalf of , in 's presence, and at the express direction of . However, this document does not provide the necessary language for another person to sign for the Grantor. For assistance with this procedure, a lawyer should be contacted.
About Living Trusts
Learn about how to plan the distribution of your property and assets
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How to write a Living Trust
You can easily make a Living Trust using our simple online interview, but you will need to gather some information before you can make the document. Here is what you'll need to make your Living Trust using Rocket Lawyer:
Your information: Name, city, state and the date the documents will be signed.
Possible beneficiaries: Spouse, children's names, non-family members or organizations who may be beneficiaries. You can also make provisions for future children and pets. The form also allows you to designate a pet caregiver.
Trustee: Who will be responsible for managing the trust. You'll also want to list a co-trustee or a replacement trustee in case something happens to the original trustee. You also have the option of appointing a professional such as your lawyer or accountant. Also, whether the trustees will be bonded.
List of assets: The assets, the value of the assets, and a description of the assets. You can add as many assets as you need to the document. You can also say whether trustees will be sending you payments if you become incapacitated.
Distribution: How you want the trust assets to be distributed. Will you need to set aside monies to pay the trustee? Are the beneficiaries allowed to take loans from the trust?
Tangible assets: You can dictate how tangible assets may be distributed such as vehicles, jewelry or household items.
Other items to consider: Will the trustee need to provide regular reports? Are trustees allowed to invest funds? Are trustees released from liability if they make a bad investment in good faith? How do you want funds distributed if a beneficiary is no longer able to receive funds? Do you have beneficiaries already assigned to certain assets such as your life insurance?
If you have any questions about what's right for your estate plan, you can connect with a Rocket Lawyer network attorney for quick answers or a document review.
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Living Trust vs. Will: What is the difference?
The Living Trust or Joint Living Trust are often viewed as excellent companion documents to a Will. Some of the perceived advantages of the Living Trust are as follows:
Privacy
A Living Trust is more private. Usually, a will is admitted to probate after the writer dies, so that the terms of the will can be administered. "Probate" refers to the court procedures that determine the validity of the will, deal with potential will challenges, resolve the claims of creditors of the decedent, and ultimately distribute the decedent's assets to the beneficiaries.
As a result, the will becomes part of the court records that can be inspected by the public upon request. In contrast, a Living Trust is administered by a successor Trustee usually without court involvement, and normally does not become a public record. Thus, the terms of a Living Trust, including the identities of the beneficiaries and the manner in which the grantor's assets will be distributed, remain private.
Reduced probate costs
A Living Trust may avoid at least some of the perceived "evils" of the probate process. The probate process takes time (generally, six months to three years), and involves court costs, executor fees, and lawyer fees. The cost of it all can vary greatly, depending on state law, ranging from 2% of the amount of the decedent's gross assets to 10% or more in some states.
However, the costs associated with administering the trust assets after a grantor's death, including the obligation to prepare various tax returns, account for trust assets, pay the grantor's debts, and make required distributions, may be similar in amount to the costs of probate. Therefore, it is difficult to predict whether the amount of savings that might result from the use of a Living Trust will be more than a minimal amount.
Management of property
A Living Trust offers a mechanism for allowing another person or organization to manage all or some of your assets if you become unable to do so, or if you simply prefer to "have someone else do it." Thus, a Living Trust may serve as an alternative to a conservatorship or guardianship. A will serves a different purpose and only takes effect after your death.
Although similar, some people may even choose to have both in place. If you’re wondering which one is right for you, don’t hesitate to ask a lawyer.
Living Trust FAQs
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How does a Living Trust work?
A Living Trust is a trust created by a person (the grantor) for use during that person's lifetime. It provides for payments of income for the grantor and the distribution of the remaining assets of the trust upon their death. It also includes an option which allows the grantor to amend or revoke the Trust at any time.
Typically, a Living Trust includes provisions that allow the grantor, who often serves as initial trustee, to manage the assets of the trust until they:
- Become "disabled" (unable to manage his or her financial affairs).
- Simply prefer to have someone else (perhaps a bank's trust department) manage their affairs.
- Die.
If that occurs, the trust provides for a successor trustee to take over the management of the Trust.
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What are the advantages of having a Living Trust?
Faster distribution of assets
Assets in a Living Trust may avoid the probate process and fees associated with wills. In some states, the probate proceedings associated with the distribution of assets as outlined in a standard will could take months. A Living Trust is a way for you to set aside funds for quicker distribution for caring for your minor children, disabled family members, or pets. Assets can also be designated to support you if you become incapacitated and cannot manage your finances yourself.
They are private
In most cases, a will becomes public record once probate begins. Anyone can request copies of your will easily. If you have certain assets you want to distribute privately, you can use a Living Trust to manage the distribution of assets. If you appoint a professional executor, even your family wouldn't have to know about the trust or beneficiaries.
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What is the difference between revocable and irrevocable trusts?
Revocable Living Trusts are most commonly used. Revocable trusts are easy to change. Irrevocable trusts cannot be changed after they are signed. Most often Revocable trusts turn into irrevocable trusts after the trust maker dies. Irrevocable trusts are frequently only used by those wealthy enough to fund the trust without possibly needing the assets later. The advantage to irrevocable trusts is that the assets in the trust are no longer considered part of your personal assets, so the funds are protected.
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Can I have a Joint Living Trust with my spouse instead?
Yes, a Joint Living Trust can be created by a person and that person's spouse. In some cases, this method is preferable to creating two separate Living Trusts, especially where assets to be contributed are held jointly and could not easily be divided to be placed into two separate trusts. Another advantage is that the joint trust is created in a single document rather than multiple documents.
Typically, the Joint Living Trust provides for both spouses, who are the co-grantors, to serve as the initial co-trustees. They serve for such time as they are able and willing to manage the assets of the trust during their joint lifetime. After the death, disability, or voluntary resignation of one, the other can continue as trustee. When neither grantor serves as trustee, a successor trustee takes over the management of the trust.
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Can I amend a Living Trust?
Yes, there are several ways to amend the trust. For minor deletions or additions, see the "Living Trust Amendment" document. For major or numerous changes, however, it is recommended that the trust be "amended and restated" in its entirety.
For such cases, this document offers an optional sentence that can be included in the Living Trust. Said sentence provides that the trust agreement is "amending and restating" the existing trust agreement. By including this reference, the new agreement has the effect of simply continuing the current, existing trust which was established under the prior agreement, but with the desired changes.
This "continuation" means that a new trust is not being created, and therefore, it is not necessary to transfer assets from an "old" trust into a "new" trust. In order to amend and restate the trust, you must deliver to the trustee an appropriate written amendment/restatement, signed by the grantor and the trustee, that restates the trust to incorporate the desired changes.
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If I have a Living Trust, do I still need a Last Will and Testament?
Yes. A Living Trust is just one part of your estate planning. Wills often are used to designate how assets, that are not included in the trust, are to be distributed. Sometimes people don't move all their assets to the trust or obtain properties after the trust is created so they need a way to dictate how those assets are to be disbursed. You can even dictate in your will that whatever is not included in the trust to be distributed to a single person. If you do not have a will alongside your trust, assets not included in the trust will be distributed according to state laws. Unlike a Living Trust, the will must go through probate.
Some people choose to make a Pour-Over Will. This type of will dictates that assets are to be moved into a trust after your death. Unlike Living Trusts, Pour-Over Wills still need to go through probate.
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