You will need all title and deeds, share certificates and life insurance policies to “fund the trust,” that is, transfer ownership to the trust, which is described in more detail below. Retrieve them now and prepare them so that the process can run more smoothly and quickly. You can only bring the assets you own to the trust, so if you`re married or in a domestic partnership and much of your property is divided, you`ll probably want to create a joint trust. Two individual trusts would be the alternative. It is generally recommended that if you create a living trust, you should also have a so-called payment will. In the event that property is accidentally removed from the trust, the transfer transfers those remaining assets to the trust. A LegalZoom Living Trust is state-specific and takes effect as soon as you sign it. Since the assets of the trust are no longer owned by the settlor, a creditor cannot sue them to pay off the settlor`s debts. A living trust combined with these three documents will provide you with a comprehensive estate plan to ensure that you and your family are provided for in the future. The first half of the Living Trust checklist below will help ensure you have what you need before you start the paperwork. A trust can be revocable or irrevocable. In a revocable trust, the settlor retains full control of the assets contributed to the trust, can remove them from the trust, change the beneficiaries, and terminate or revoke the trust completely.
For most estate planning purposes, the flexibility of the revocable life trust is a good option because you retain control of the assets you have invested in the trust. The settlor finances the trust by placing assets in it. At that point, the settlor relinquishes control of the property registered or titled in the name of the trust. As the property is held in trust, it is not included in the surviving spouse`s estate upon the surviving spouse`s death, and the surviving spouse exemption is also always available. This gives a married couple the opportunity to use the full amount of the combined estate tax exemption ($10.98 million in 2017). A credit shelter trust is established so that in the event of the death of one spouse, the trust can be used by the surviving spouse and the surviving spouse can receive income from the trust`s assets, but ownership reverts to other family beneficiaries – usually children – free of federal tax up to the deceased`s allowance ($5.49 million in 2107). However, you don`t need to include all of your assets in the trust, so once you have a list of all your assets in front of you, you can choose which ones you put in your trust. In general, you want to involve everyone who would normally go through the probate process to reap the full benefits of a living trust. Whether a living trust is better for you than a will depends on the value of the cost of the additional options it offers. Once ownership of property has been transferred to the trust, the settlor cannot remove it from the trust.
Nor can the settlor change the beneficiary, change the terms of the trust, or revoke it. Some terms are common to all trusts you should be familiar with. The creator of a trust is called a settlor or treutator. The people to whom the assets of the trust will be distributed after your death are called beneficiaries. Compare this to testamentary trust, which is only created by your death. Although you will include all the details about trust in your will, a testamentary trust is not established when you sign your will. It is only after your death that trust itself arises. A living trust can be the perfect tool for your estate plan. However, there are several advantages and disadvantages to using a living trust that warrant careful consideration of whether a living trust is the right estate planning tool for your specific needs. Most settlors refer to themselves as trustees in order to retain full control of the trust. In this situation, a successor trustee is also appointed who, after the death of the settlor, takes over the management of the revocable trust and the distribution of assets.
Nevertheless, it is important to know your state`s law regarding irrevocable trusts to understand exactly how well your assets are protected from creditors. Keep in mind that a court may consider a transfer of assets to a trust to be fraudulent if it is done with the intent to defraud creditors. Such a conclusion could not only expose the assets of the trust to liability, but also impose severe legal penalties on the settlor.