People often think that living trusts are only for those with great wealth or complex assets. They also believe they’re difficult to manage. Neither one of these things is necessarily true. A revocable living trust is an excellent estate planning tool for anyone who doesn’t want their estate to go through a long and costly probate process when they’re gone.
Setting up the trust can be fairly straightforward when you have experienced estate planning guidance. After the trust is established, the next step is to put the appropriate assets in it, which is known as funding it. Typically, these are high-value assets like homes and some types of bank and investment accounts. Some people place their vehicles in their living trust as well.
How can you fund a living trust?
You’ll need to change the name on these assets (or your deed for real estate assets) to reflect the name of your living trust, which will include your name and list you as the trustee. There is typically a fee for changing the name on a deed, but not for changing the name on accounts. You can continue to use the accounts as you normally would.
Because the trust is revocable, you can add or remove assets as needed. If you buy a new home, for example, you’ll just want to put the deed for the new home in your trust’s name. However, other high-value assets like jewelry, art, antiques and collectibles that don’t have official ownership documents require an extra step to place in a living trust. Generally, this involves attaching a separate document to the living trust document.
What will happen to it after you’re gone?
While you’ll be the trustee for your living trust while you’re alive, you’ll want to name a successor trustee to handle it after you’re gone. Oftentimes, people name their executor as their successor trustee. When you pass away, the trust will become irrevocable, so no one can make changes to it, and the assets in it will be distributed as you designated.
This is just a very brief, general overview of revocable living trusts. Other, more complex assets like business interests and intellectual property can also sometimes be placed in these trusts. For all these reasons and more, it’s worthwhile to find out more about this valuable estate planning tool and how it can be a crucial part of your plan.
