A living trust is a trust set up while a person is still alive that provides for long-term property management and regulation of an individual’s assets if he becomes incapacitated. Living trusts help avoid probate proceedings and may help to guard financial privacy and reduce taxes. These trusts save money that would have been spent on court proceedings, and allow assets to be passed on to designated heirs without going through legal processes. Living trusts are revocable, but in order for them to be binding, take care to set them up correctly.
Name a Trustee
A trustee is a person named by the grantor (the person establishing the trust) to control the assets of the trust. Legally, this can be the same person as the grantor or it can be a different person. It would benefit you to name a person other than yourself to be your trustee, because the primary reason most people establish a living trust is to manage and distribute their assets if they are unable to make decisions or have died. However, you may name yourself as the trustee in order to control the estate as long as you are able and also designate a successor trustee to take over when you can no longer do so.
Name the Beneficiaries
Beneficiaries are heirs, the people who will inherit your assets after you are gone. Make this specific and clear, and designate everyone by name. Do not use general terms like “my children,” “my church” or “my grandchildren.”
Manage Your Assets
Almost any kind of asset can be put into a living trust, including stocks, real estate, life insurance, personal property, pension benefits and savings accounts. This is going to involve some tedious paperwork, however. You will need to change the account holder name on all your assets to the name of your trust. If you own a house, you will need to get a new deed showing that you own the house as a trustee rather than as an individual.
Pay the Costs
Setting up a living trust may cost more than setting up a will. In the end, however, it will save you, your family and your heirs a great deal since there will be no automatic court supervision to deal with your estate, no legal challenges and no probate proceedings. You can buy special software packages or books dedicated to helping you set up your own living trust without involving a lawyer. The website Nolo offers both a software package and an online program for individuals to organize their living trusts. As of 2010, the online program cost $89.99 and the software $58.49.