If property is tied up in probate, this can mean months of stress for your loved ones. If you have property held in a living trust, however, this property can evade probate. With a living trust, you would have this property held under a trustee's name, and this property would be held for someone else, the beneficiary. Upon your passing, the successor trustee would give the property over to any beneficiary or beneficiaries you named. This transfer only requires weeks to perform.
While living trusts can avoid probate in the end, it can mean a great deal of paperwork to start. To understand how the process works, it is important to be familiar with the terms. The term grantor, settlor, or trustor refers to the person who makes the living trust. A trustee is the person in charge of the property. If you create a trust, you are both the grantor/settlor/trustor as well as the trustee. The successor trustee is the one will take charge of the trust when the trustor passes away or is incapacitated. This successor trustee is usually a spouse, adult child, or good friend. Whoever is getting the property that is held in a trust is called a beneficiary.
Before you go ahead and make a living trust, there are a great number of issues to consider. For married or domestic partners, a shared trust can be a good idea. Depending on your circumstances and wishes, creating two separate trust can be the way to go. You will also need to choose what to include in the trust; it is not advisable to place everything in trust, just the big things like a house that could get held up in probate. Then of course, you have to name beneficiaries, whether they will be relatives, friends, and/or charities. You probably already know how you will handle this choice, but you should also remember to include alternate beneficiaries as well. Then you will have to name a successor trustee.
If you are leaving property in trust for children, then you will probably need to name an adult who will oversee the property, a property guardian, per the Uniform Transfers to Minors Act (UTMA). Then you will have to write up the Declaration of Trust, and this document must be signed before a notary.
What many people forget to do is to make themselves the trustee of the property. This requires that you sign a new deed as the trustee. Otherwise the trust will not work. Once you have finished all the pertinent paperwork, you will need to preserve the document, hopefully somewhere like a fireproof safe. You will need to tell your successor trustee where it is.
It should be noted that not everyone needs a living trust. And whether or not you create a living trust, you still have to create a will. If there is any new property not mentioned in the trust, then a will can decide who receives this property. Without a will, the state and not your wishes could mandate who gets what. Some of your property may not be handed down the people you want it to pass to. Also, if you need to name a guardian for any children, this would have to be done through a will.
As with any issue in estate planning, it is often a good idea to consult a lawyer about any difficulties you face. You can also consult a probate attorney about the benefits and limits of a living trust. A probate lawyer can also help you draw up a living trust as well as help you with your will, ensuring that everything is in order.