What is a Living Trust?
What is a Living Trust? It is a set of written instructions for who handles your assets and how the assets are to be handled during your life and after.
A Living Trust (also called a “Revocable Living Trust” or a “Family Trust”) is a legal document that contains your instructions. It sets out who handles your assets when you cannot manage them and how to distribute property after death. It has the status of a legal entity with its own IRS taxpayer identification number (which is your Social Security number when you are alive).
A Trust establishes a legal relationship between a Trustor (the person who makes the trust) and a Trustee (the person in charge of the trust) for the benefit of one or more persons or charities (Beneficiary).
For most trusts, the Trustor, the Trustee and the Beneficiary are all the same person, while that one person is alive. When you create a Trust you transfer title ownership of your assets to the trust. When you transfer title to your trust you DO NOT relinquish any control. You can still buy, sell, borrow or transfer.
Trusts serve many purposes. If assets are properly held in a trust, probate can be avoided when the Trustor dies. In this way, the process of distributing assets can be kept out of the court (and therefore kept private!) and can save time and/or money. A trust also avoids the expense and problems of having a court conservatorship proceeding in the event of disability.
A Living Trust should be a custom document, specific to your own unique situation. Extensive (and expensive) legal problems often happen when people are sold a non-lawyer trust mill document, or if a trust is created using an online service, or “do-it-yourself” program. The role of the lawyer is to give your decisions legal effect and ensure that your wishes are carried out. If actions are taken without talking to an attorney, you can not only waste time and money but can also create even more problems down the line.