Revocable living trusts, also known as inter-vivos trusts, are prepared for individuals and couples with sufficient property to alleviate the burdens and expenses of the probate process, and who wish that information about their assets and testamentary wishes be kept private. Like all legal documents, there are certain elements that a revocable living trust must have for it to be valid.
Declaration of trust
A declaration of trust is an assertion that by signing the document, the grantor has the intent to create a trust instrument whereby a trustee holds property for a beneficiary or beneficiaries.
Trustees
The grantor appoints the first trustee of the trust (usually him- or herself) and nominates the successor trustees to handle management of the trust property if the grantor becomes incapacitated or dies. The trustee generally has all the powers of the original owner (to make investments, buy and sell property, etc.) and manages the assets for the trust beneficiaries. Note that if the grantor is no longer serving as trustee (i.e., the grantor is incapacitated or has died) the trust generally requires that the successor trustee prepare annual accountings of their management activities and a final accounting before the trust is closed.
Trust property
Your estate planning attorney should handle the transfer of larger and more valuable assets such as real estate and business interests into the trust, and provide the necessary paperwork for you to transfer your bank and investment accounts yourself. A deed is prepared to transfer real estate, and a bill of sale to transfer business interests from your name to your trust. A letter and a copy of specific pages of the trust are generally sufficient for the banks to make the change.
Note that changing title does not mean that it is no longer yours ― it merely facilitates the transfer of the property to the control of the successor trustee named in the trust instrument in the event of your incapacity or after your death. All your successor needs to show is a copy of the trust and certification from your physician that you are incapacitated or a death certificate, and they may proceed to manage your assets without court involvement.
Beneficiary designations
A living trustee is the beneficiary of your trust. When you die, the trustee is responsible for paying the beneficiaries according to the terms of the document. The beneficiaries may be family members, friends or organizations (usually charitable) and may receive a fixed sum or a percentage of the trust. Trusts usually specify that minors have their inheritance held in a subtrust, with payments for their educational and health needs, with the balance paid when they reach a certain age.
The preparation, funding, management and distribution of a revocable living trust usually require the assistance of an experienced and knowledgeable estate planning attorney. Contact Armstrong & Lamberti, PLLC, PPLC to learn more.