A living trust is a legal agreement between the Grantor (the person who sets up the living trust) and the Trustee (the person who manages the assets in the living trust). The Grantor and Trustee are almost always the same person so the way you manage your assets does not change - it’s business as usual. If you are single and set up a living trust, you are the Grantor and will also be the Trustee. If you are married and set up a living trust, both you and your spouse will be Grantors and Trustees.
The Trustee agrees to manage the assets according to the instructions in living trust document. During your lifetime, the Trustee will make distributions for your benefit and manage assets in your best interest. Remember, you are your own Trustee when you set up your living trust, so this means nothing changes in the way you manage your assets. When setting up the living trust, you will name successor Trustee(s) to manage your assets in case you lose capacity and can no longer manage your affairs. The successor Trustee(s) you name will also be in charge of distributing your assets upon your passing to the people you have selected (i.e. “beneficiaries”). Chose your trustee(s)
In your living trust, you will name who your beneficiaries are upon your passing and specify how your beneficiaries should inherit your assets. For example, if you have a minor beneficiary, you can direct the Trustee to hold the assets in living trust until your beneficiary reaches a specified age. Another example is if you have a disabled beneficiary, you can direct the Trustee to hold that beneficiary’s inheritance in a special needs trust so the disabled beneficiary does not lose any means-tested public benefits such as Medicaid or SSI.
Why have one?
A living trust avoids the default plan that the government has set up for you - probate. In a nutshell, probate is a court process that transfers assets from the person who died to the person who gets the assets, whether by law (called intestacy) or by a will the decedent had. Probate is a very costly, time consuming, complex and public process. This painful court process is avoided with a living trust! Prepare your trust in minutes
A living trust also avoids conservatorship or guardianship, the default plan the government has set up for someone who loses the ability to manage their own affairs. In a conservatorship, a judge will choose a person to make financial and health care decisions for you. Like probate, this is a very costly, time-consuming, complex and public process, but, this can be avoided by having a living trust and other important documents that are included in a living trust based estate plan on LivingTrustify.
Who needs one?
If you own real property or have over $100,000, you should set up a living trust to avoid probate and conservatorship court.