A living trust benefits children, relatives and organizations after a grantor’s death. A grantor is a person who establishes a living trust. Similar to a will, a living trust is a legal document that allows you to distribute your assets after death; however, unlike a will, a living trust is almost impossible to contest in court. Anyone can set up a living trust. But, before you start the estate planning process, familiarize yourself with the basics of what a living trust is and how it works.
Comply with funding rules. For a living trust to be effective, the person who sets up the trust must fund it with real property, automobiles, furniture and other assets. Hire a licensed appraiser to determine the fair market value of each asset.
Be aware that you will maintain full control of your assets. For example, if you transfer an heirloom property into a living trust, you will have unlimited access to and full control of that property during your lifetime.
Familiarize yourself with the people involved in a living trust. Name a successor trustee, who will take over control of the living trust after your death. This person will oversee your assets and manage your living trust after your death. Identify the beneficiaries of your living trust. Beneficiaries are the persons or organizations expected to benefit from your assets.
Control your assets now and after death. A living trust grants you the legal right to distribute your assets to specific beneficiaries without the threat of seizure from creditors during a bankruptcy filing or in probate court.
Complete the necessary paperwork. Fill out an Agreement for Sale and Purchase, which grants you the legal right to transfer personal assets into a living trust. Loan your living trust the money to pay you for those assets using a Deed of Acknowledgment of Debt form. You can forgive this debt over time in accordance with your state’s gift-giving laws.