A living trust can be an effective building block to construct your estate plan around because it is a versatile device, that is a good fit, for a wide range of people. You can benefit from a living trust, even if you do not consider yourself to be wealthy. But, when it comes to trust administration proper funding is crucial. Let our Florence trust lawyers explain.
How a revocable living trust works
The revocable living trust is an estate planning device that you should certainly explore before you make any final decisions. Contrary to a widely held belief, you do not have to be a multimillionaire to benefit from the creation of this type of trust. Plus, you do not surrender control of assets that you convey into a living trust. You can act as the trustee while you are living, and you can also act as the initial beneficiary. It would be possible to change the terms of the trust, and you can even rescind or revoke the trust entirely at any time.
The benefits of a revocable living trust
If you create a living trust, you would be able to serve as the trustee while you are living. As the trustee, you would be solely responsible for the trust administration tasks, and you could also act as the beneficiary. The beneficiary is the person who can receive monetary distributions from the trust.
Since you can act as the trustee and the beneficiary initially, you maintain control of the helm throughout your life. The actions of the trust would be in your hands, and you could add or subtract resources from the trust at any time.
Your living trust can be modified
Living trusts are revocable. You would have the power of revocation, so you could dissolve the trust entirely if you ever wanted to call the whole thing off and take back direct personal possession of the assets. Our Florence trust lawyers advise using a revocable living trust because of its many benefits.
How to fund a living trust
When you convey assets into the living trust, you are funding the vehicle. To do this, you change the ownership registration of the property that you want to convey into the trust. You make the trust the new owner of the property. Typically, you would list the property that you are conveying into the trust in the trust declaration.
It is also possible to list this property on an additional document called a schedule. Another option would be to use the trust agreement to transfer the property to the trustee, and of course, you will act as the trustee while you are living, so you are not surrendering control of the property. If you still have questions, speak to our Florence trust lawyers.
The purpose of a trust declaration
You create a trust declaration and you name a successor trustee to take over the role after you pass away. This trustee could also be empowered to administer the trust in the event of your incapacitation, or you could name a disability trustee and a different trustee to handle the business of the trust after you are gone.
In your trust declaration, you leave behind instructions with regard to the way that you want assets to be distributed to the beneficiaries. You can allow for lump sum distributions of the entirety of the assets, but you would also have the ability to instruct the trustee to distribute limited assets over an extended period of time. After your passing, the trustee would follow these instructions. Assets would be transferred to the beneficiaries in accordance with your wishes.
Specifics about funding a trust
Now that we have provided the necessary background, here are the specifics you need to know about funding a trust. This is an important aspect of trust administration. When you place your assets into a living trust, you are funding a trust. Funding the trust involves changing the ownership registration information on the property that you want to put into the trust. The trust would be named as the owner of the property. You could list the property that you are conveying into the trust in the trust agreement. It would also be possible to list the property on a separate document called a schedule.
How to handle assets left outside of your trust
When you create your estate plan, you should execute a pour-over will to sit beside your living trust. If you have any assets that are still in your direct personal possession when you pass away, the pour-over will would allow the trust to absorb these resources. If you do not have a pour-over will, and you have no documents other than the trust, the assets that were in your personal possession would become probate property. The probate court would determine the way they should be distributed.
Join us for a FREE seminar today! If you have questions regarding funding a trust or any other trust administration matters, please contact the experienced attorneys at The Potter Law Firm for a consultation. You can contact us either online or by calling us in the Florence, KY area at (859) 372-6655, in Ashland, KY at (606) 324-5516 or in the Charlotte or Huntersville, NC area at (704) 944-3245. We are here to help!