A living trust is a document that sets out what you want to happen with your family and property should you become incapacitated and when you die. During your lifetime, you will make all of the decisions just as you always have. You will put your real and personal property into the living trust.
Putting your property into the trust is called funding the trust. The types of property that do not go into your living trust are those that have beneficiary designations, pay on death clauses, and those that are owned jointly with another person with rights of survivorship.
These may include retirement accounts, bank accounts, brokerage accounts, real property or other personal property.
During your life you will make decisions about your property. You will be acting as the trustee of your living trust. When you create a living trust, you are putting your estate plan into writing. When you are incapacitated or when you die, the person you name to make decisions will take over for you. This person is called the successor trustee. When you die and have a living trust, your estate does not have to go through the judicial process of probate.
Instead, your successor trustee takes over and distributes your estate the way you wanted and makes sure your family is provided for as set out in the living trust.
Your successor trustee will probably have to hire an attorney and accountant in order to carry out the directions in your trust. But these transactions are private. Living trusts do not go through probate.
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Like regular appointments with doctors, your estate plan needs to be visited regularly, to make sure all is in order. Annual updates about significant life events are a must. Keeping you plan current is much easier than having to do a comprehensive overhaul. Sign up for our newsletter to get information about life events and decisions that can shape your life.
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