FAQ

1. WHAT IS A REVOCABLE LIVING TRUST?  A Living Trust is a legal document used to plan and organize an individual’s estate.  The transfer of property from an individual’s name to the name of his or her trust can create a Living Trust.  The individual simply re-titles his or her major assets.  An example is changing the deed to a family home from Joe and Jane Smith to Joe and Jane Smith Family Trust.  The control remains with the individuals; only they can sell the house.  However, by creating a Living Trust many of the emotional strains that are caused by the lengthy and expensive probate process may be eliminated.

2. WHAT DOES REVOCABLE MEAN? Revocable means that the trust can be changed or cancelled.  A Living Trust can either be revocable or irrevocable.

3. WHAT DOES LIVING MEAN?  Living means that the trust was created during the individual’s lifetime.  A Testamentary Trust is effective after death and must go through the probate process.

4. WHY SHOULD I WANT A LIVING TRUST? Most individuals obtain a Living Trust to avoid the lengthy and expensive probate process and conservatorship.

5. WHAT IS PROBATE AND WHY AVOID IT? Probate is a process whereby a deceased person’s estate is placed under direct court supervision.  The court makes sure that debts are paid and property is distributed according to the Will, or in the absence of a Will, in accordance with state law.  Individuals try to avoid probate because it can be expensive and lengthy process that becomes public record.  The Living Trust avoids probate and is less expensive, quicker and private. 

6. WHO ARE THE PARTIES TO A LIVING  TRUST?
A.     Trustor -  The person who places his or her assets into the trust.
B.     Trustee - The person that controls the assets of the trust.
C.     Beneficiaries -  The individual who places his or her assets in the trust is the
beneficiary during their lifetime.  Upon his or her death, the designated heirs become the beneficiaries.
D.     Successor Trustee(s) - A person that is selected by the individual, who upon the individuals demise, distributes the assets of the Trust to the beneficiaries in accordance with the instructions.

7. IS A WILL NECESSARY IF I HAVE A TRUST?  A Special Will called a Pour Over Will is drafted along with the Trust.  The purpose of this Will is to pick up assets that the individual may not have placed in the Trust and “pour” them into the Trust at the time of their death.

8. HOW IS THE TRUST FUNDED?  The trust is funded by changing the title of assets from you as an individual to you as a Trustee of your Trust.

9. DO I HAVE TO TRANSFER ALL OF MY ASSETS TO THE TRUST?  No.  But you must transfer all of your major assets into the trust in order to avoid probate.

10. WILL MY LIVING TRUST AVOID PROBATE IN OTHER STATES WHERE I OWN REAL ESTATE?   Yes.  Without a Living Trust the family may have to hire an attorney to repeat the process in each state.
 
NOTE:  This information is not to be construed as legal or tax advice.  You should independently consult with an attorney or accountant for advice.