By Attorney Keith Morris
Special to THELAW.TV
A living trust is one of the best tools an estate planning attorney can use to help you organize your assets during your lifetime and protect them for your future beneficiaries.
How does a living trust work? First, your assets are put into a trust that is administered for your benefit while you are alive, then transferred to your beneficiaries after you die. Most people creating a living trust name themselves as the trustee in charge of managing their assets, so that even though assets are in a trust, they are still under your control.
An estate planning attorney can help you ensure all of your legal bases are covered when executing a living trust, but here is a checklist of what is needed to get you started.
1. List Your Assets
The first step in creating your living trust should be to make a detailed list of all of your assets. This means everything from tangible items, such as homes, cars, and personal possessions, to intangible items, including bank accounts, stock and bonds, and life insurance policies.
2. Gather Documentation
Before creating your trust, you’ll need all documentation to support your list of assets. Titles, deeds, stock certificates, life insurance policies, and any other documentation that supports the ownership of your assets is vital to your estate planning lawyer to start the process of “funding” your trust with your assets.
3. Deciding On Heirs
After you have a list of assets, it will be easier to decide which loved ones should receive which properties from the trust. You should designate heirs, also called beneficiaries, to receive certain properties, but also contingent beneficiaries, or a backup in case the initial heir does not want the property they are to receive.
4. Selecting A Successor Trustee
Although you will likely want to be the trustee during your lifetime, you’ll need to name a successor trustee who can manage the trust after you have died or in the event that you become unable to manage it due to mental or physical incapacity. Be sure to discuss the job with the person who you will name and let them decide if they are up to the task.
5. Name Guardians
A living trust is not the right place to name a guardian to care for your children, but it is the right place to name who will be the guardian of their shares in your estate. This guardian will manage the trust assets on your children’s behalf until they have reached adulthood.
6. Transfer Titles To Yourself
An often missed step in the process of creating a living trust is one of the most important. It’s vital to transfer your assets to the trustee of your living trust. This is known as funding the trust. Doing this correctly will help your loved ones avoid complications during the probate process after you die. This is an important step to get right, and the advice of an estate planning attorney is strongly recommended before completing it.
The author, Keith Morris, is an estate planning attorney in Houston, Texas.