How To Setup a Living Trust?

Creating a living trust is a smart way to protect your assets and ensure they are distributed according to your wishes after your lifetime. Setting up a living trust can also help your loved ones avoid the time-consuming and often costly probate process. In this guide, we will walk you through the steps to set up a living trust so that you can have peace of mind knowing your estate is in good hands.

What Is a Living Trust?

A living trust is a legal document that places your assets into a trust during your lifetime. You can manage these assets while you are alive and decide how they will be distributed after your death. Unlike a will, a living trust allows your beneficiaries to avoid probate court, which can simplify the inheritance process.

There are two main types of living trusts:

• Revocable Living Trust: You can modify or cancel this trust during your lifetime.
• Irrevocable Living Trust: Once set up, this trust cannot be altered or revoked.

Most people opt for a revocable living trust for its flexibility.

Why Should You Set Up a Living Trust?

There are several benefits to setting up a living trust, including:

• Avoiding Probate: Assets in a living trust bypass the probate process, saving time and money.
• Privacy: Unlike a will, which becomes public record, a living trust remains private.
• Control: You decide who gets what and when, offering greater control over your estate.
• Planning for Incapacity: If you become unable to manage your affairs, your successor trustee can step in to handle your assets.

Step-by-Step Guide to Setting Up a Living Trust

Follow these steps to create a living trust:

Step 1: Determine Your Goals

Start by considering your goals for the trust. Ask yourself questions like:

• What assets do I want to include in the trust?
• Who will be the beneficiaries of the trust?
• Who will manage the trust after my death or if I become incapacitated?
  
  

Having a clear understanding of your goals will make the process smoother.

Step 2: Choose the Type of Trust

Decide whether you want a revocable or irrevocable living trust. For most people, a revocable living trust is the better option because it allows you to make changes as your circumstances evolve.

Step 3: Create a List of Asset

Make a detailed list of the assets you want to place in the trust. These can include:

• Real estate
• Bank accounts
• Investment accounts
• Business interests
• Personal property (e.g., jewelry, artwork, vehicles)
  
  

Include details such as account numbers, property deeds, and estimated values.

Step 4: Choose a Trustee

The trustee is responsible for managing the trust. You can act as your own trustee while you’re alive, but you’ll need to name a successor trustee to take over upon your death or incapacitation. Choose someone trustworthy and capable, such as a family member, friend, or professional trustee.

Step 5: Draft the Trust Document

Work with an estate planning attorney to draft your living trust document. The document should include:

• Names of the trustee and successor trustee
• Names of the beneficiaries
• Instructions for distributing the assets
• Details about managing the trust if you become incapacitated
  
  

An attorney can ensure that your trust complies with state laws and addresses your specific needs.

Step 6: Transfer Assets Into the Trust

Once the trust document is complete, you’ll need to transfer ownership of your assets into the trust. This process is known as funding the trust. Here’s how to transfer different types of assets:

• Real Estate: Update the property deed to reflect the trust as the owner.
• Bank Accounts: Change the account ownership to the name of the trust.
• Investment Accounts: Update the ownership records with your financial institution.
• Personal Property: Create an inventory list and assign ownership to the trust.
  
  

Your attorney can guide you through this process to ensure it is done correctly.

Step 7: Keep Your Trust Updated

Life events such as marriage, divorce, the birth of a child, or changes in financial circumstances may require updates to your living trust. Review your trust periodically and make any necessary adjustments with the help of your attorney.

Common Mistakes to Avoid

Here are some common mistakes people make when setting up a living trust and how to avoid them:

• Failing to Fund the Trust: A trust is only effective if it is properly funded. Make sure all intended assets are transferred into the trust.
• Not Naming a Successor Trustee: Always name a reliable successor trustee to avoid complications later.
• Ignoring State Laws: Trust laws vary by state, so it’s important to work with an attorney familiar with local regulations.
• Not Updating the Trust: Keep your trust up to date to reflect changes in your life and finances.

Do You Need a Lawyer to Set Up a Living Trust?

While it is possible to create a living trust on your own using online templates, working with an experienced estate planning attorney is highly recommended. An attorney can:

• Tailor the trust to your specific needs
• Ensure the trust complies with state laws
• Help you avoid costly mistakes

How Much Does It Cost to Set Up a Living Trust?

The cost of setting up a living trust varies depending on the complexity of your estate and the attorney’s fees. On average, creating a living trust with the help of an attorney can cost between $1,500 and $3,000. While this may seem like a significant expense, the benefits often outweigh the costs.

Final Thoughts

Setting up a living trust is an important step in securing your financial future and protecting your loved ones. By following this guide and working with a qualified will and trust attorney and estate planning attorney, you can create a living trust that meets your needs and provides peace of mind.

For professional assistance in setting up a living trust, contact Doane & Doane today and let our experienced team guide you every step of the way!