In the context of estate planning, you might sometimes hear about “living trusts,” also called revocable trusts or inter vivos trusts. Living trusts are useful tools for anyone trying to plan for their future under certain circumstances, as they can allow you to fully marshal all assets of your estate prior to your death in lieu of having a last will and testament. Living trusts can create some security for you and your loved ones, since you direct how the trust will be managed and distributed according to your wishes even when you are not there to take care of your family anymore.
A living trust is, like all trusts, a kind of arrangement where some or all the money or property you own is transferred to the trust and can be managed by someone else you have entrusted to do so. This person, called a trustee, is legally responsible for managing your money and property, and caring for it in accordance with your wishes. Normally, trusts are established to care for money or property on behalf of people who cannot do it themselves, such as trust funds established for minor children, or those established by a will to manage the money or property of the deceased.
In the case of a living trust, however, you can designate yourself as the trustee to continue managing the money or property on your own, without needing to appoint a trustee to handle it for you. And indeed, so long as the trust remains revocable (which is to say, so long as you are able to terminate or modify the trust whenever you want), you can freely take money or property out of the trust, or put more assets into the trust, without limit. But if that is the case, then why not just keep that money or property titled in your name?
The primary benefit of a living trust arises when you pass away or become incapacitated and are no longer able to manage your own affairs. Any money or property you have in a living trust will continue to be managed by your trustee (or substitute trustee if you have named yourself as the initial trustee), and the trustee maintains the same legal duty they had to protect your interests that they had when you were alive and competent. Having a living trust can help avoid the time and expense of a guardianship proceeding if you later become incapacitated. Additionally, the property in your trust will be considered non-probate property, meaning it will bypass the probate process and can be distributed directly to your beneficiaries without having to first probate a Will.
However, to get the most benefit out of a living trust, you will need to do the work to re-title all of your assets into the name of your trust while you are still alive and competent. This also means you personally would no longer be the title owner of important assets such as your house, your vehicle, your bank accounts and/or any of your other financial assets. Instead, the true owner of these assets would be your living trust.
If you want to discuss whether a living trust is right for your needs, you should call experienced estate attorneys like those at Hunziker, Jones & Sweeney. The attorneys at Hunziker, Jones & Sweeney, P.A., will help you put together an estate plan that is right for you. Just send us an email at firstname.lastname@example.org (or use our contact us form), and we will reply as quickly as possible. You can also reach us by phone at (973) 256-0456.