Q. What is a Living Trust?
A. It is a Trust made by you that is created now, not after you die. Think of
a Living Trust as a NON-Probate
Will. It can hold and manage your assets during your lifetime, and then
distribute them to your designees after you die without any probate.
Q. Who runs the trust during my lifetime and after I die?
A. Whoever you name in the Trust. Usually the trustee
(the person who runs the trust) is yourself. Occasionally you might pick
someone else as trustee if you are severely disabled. You also pick the person to serve as trustee
after you, just like you chose an
Executor of a Will. As long as you are competent, you can
change any part of the Living Trust: who gets what, who is the trustee during
your lifetime and thereafter.
Q. Do I have to do anything other than sign the Living Trust?
A. Yes. Think of a Living Trust as a water pitcher. You
have to fill it up (putting your assets in the trust), to empty it
later—distribute your assets without probate.
Q. How do I
do that, and do I put everything in the trust?
A. You retitle the assets (I give you specific written instructions
how to do this). Everything is put in the Living Trust except assets on
which you have not paid an income tax, such as a 401K plan, and Sub S corporate stock.. The trust is made the beneficiary of life insurance
policies It will mean trips to the
banks and brokers, but remember, it avoids probate. It is worth the effort. .
Q. Does this protect my assets if I go into a nursing home?
A. No, it merely eliminates all probate, the delays and
most of the cost. Medicaid planning can protect a portion of your assets. This
can be done with a few additional
hours of legal work.
Q. If it “just” avoids probate, why should I have a
Living Trust?
A. You avoid a 5 month probate claim period and many
related costs. Most people set up trusts for children or grandchildren and
Living Trusts eliminate all
probate accounting, which means the preparation, filing and hearing of an
annual account of all money in, out, and on hand at the end of every year. This
is a huge hassle, very costly, and could continue for many years.
Q. If I have a Living Trust, do I still need a Will?
A. Yes. If you forgot to put something in the trust, or die in an accident resulting in cash
payments, there will be probate. You want to get this money into the Trust. The
beneficiary of your Last Will and Testament will be your Living Trust.