What Makes a Good Living Trust?
While some people balk at the idea of drafting up a living trust, it isn’t that complex. Most people look to living trusts to avoid probate, but there are other uses. For example, some people name beneficiaries through their trust, and others set up property management. The latter can be especially useful if you become incapacitated before death. While you can form some simple trusts, maybe yourself, working with an attorney always helps. After all, it can be tricky to make sure everything is in place with your trust. This article will share the things you should make sure are in your living trust.
What Does Your Living Trust need?
A good trust contains the following:
- Determination on an individual or shared trust
- Assets Left in the Trust
- Beneficiaries Receiving Your Trust Assets
- Successor Trustee
- Property Management for Young Beneficiaries
Once you’ve settled these matters, prepare your trust document. Working with an attorney is the best way to do this. Sign the document, and have the signature notarized. There is one more important step we’ll cover at the end.
Determination Between an Individual or Shared Trust
One of the first things you need to determine is if you need individual or shared trusts. Married couples may prefer a shared trust, as the couple can pool their assets together. This can simplify things. However, other circumstances can compel people to choose an individual trust. Couples can even create two individual trusts.
Decide the Assets to Put into the Trust
Trusts are useful for bypassing probate. Don’t put everything into your trust, though. Instead, only add large items that would go through probate. This includes stocks, bonds, houses, real estate (even mortgaged!), patents, precious metals, etc… You should even consider things like works of art or small business interests.
Determine Your Inheritors and Beneficiaries
In addition to choosing the family, friends, and charities to leave your assets with, consider alternatives. Contingent beneficiaries are important. If your beneficiaries can’t accept the inheritance, your contingent beneficiary will.
Decide on a Successor Trustee
This is the person who will distribute inheritances of your trust after your passing. A son or daughter works well for this position, but other close friends or relatives will also do. This person can also be a beneficiary. Be sure to discuss this with the person so that they can prepare for the responsibility.
Decide on a Property Manager
If you are leaving children or young adults with property in the trust, it can help to choose an adult manager. This person can be a property guardian or a trustee.
Lastly, once your trust document is signed and notarized, you want to transfer property titles to yourself as a trustee. For example, if your name is John Smith and you want to hold real estate in your trust, you must draft and sign a new property deed. In this new deed, you must transfer the real estate to “John Smith, trustee of the John Smith Trust.” The actual wording will vary based on your circumstances, but this gives you a general idea of what to do.
For a better idea of managing your living trust, please speak with an estate planning attorney. The professionals at Dowd Law have experience building trusts and will help you plan your estate from start to finish.