Info - Living Trust-Standard
Note: This is general legal information intended only to inform the reader. If you need legal advice you should consult an attorney. See entire Disclaimer.
1. Your Name: identifies you, the person creating the living trust, called "trustor", or "grantor" and generally starts with the first name. If you are married, it is generally a good idea to make one trust jointly, as a married couple, especially when the property you intend to transfer to the trust is co-owned with your spouse. You will have the opportunity below at # 4 to make the respective selections.
2. Your Gender is generally needed for the purpose of using the proper pronoun in the living trust document, as well as for addressing potential gender specific concerns.
3. Your State is required as the law differs in each state. In general, the trustor's state is the state where his/her main legal residence is; that is the state where he/she lives or he/she has most contacts with by voting there, owning property there, having bank accounts there, etc. If more than one state could be claimed as legal residence, the trustor should consider the possibility that one state might have more favorable estate tax laws than the others. He/she should consult an experienced attorney.
4. Marital Status: what is trustor's legal marital status? If he/she is married, the trustor provides the full name of his/her spouse starting with the first name. Again, if the trustor is married, he should select here "I choose to make a Joint Living Trust with my spouse." This is especially wise when the property intended to be transferred to the trust is co-owned with the spouse. If the trustor selects "I choose to make an Individual Living Trust," he opts to make a separate living trust. For a married trustor an individual living trust may be a choice when the trustor owns most of his/her property separately, or when he does not want his/her spouse to manage his/her property after his/her death. However, in such situations, the trustor may want to consult a lawyer as conflicts are likely. An individual living trust is possible however, even if the property is co-owned, as the trustor can generally transfer just his/her interest in the co-owned property to the trust. Especially when their marital status changes, most people would review and, if necessary, change their living trust.
5. Original Trustee(s): To create a valid living trust, the trust must have at least one trustee. The trustee is the person who holds title, manages, and is therefore in control of the trust's property. The trustee can transfer the property in and out of the trust (sell it, etc). This is one important reason why the trust should have the trustor as original trustee. Similarly, if the living trust is created by the trustor with his/her spouse, both spouses should be original trustees of the living trust. There may be also some tax benefits: if the trust property generates income, that income can be generally declared on the personal tax returns of the trustors who are also trustees.
6. Successor Trustee: is the person or institution named to take over the living trust when the trustor can no longer act as trustee because of death or incapacity. In the case of a living trust created by both spouses, when one spouse dies or becomes incapacitated, the other spouse continues to be the trustee until he/she dies or becomes incapacitated. At that point, the successor trustee named here takes over. The successor trustee will be in charge of distributing the trust property to the trust beneficiary or beneficiaries, unless the successor trustee is named also as the sole trust beneficiary. The successor trustee may be also in charge of managing (investing, etc) the property for a longer period of time if one of the trust beneficiaries is a minor or young adult.
In order to avoid unnecessary conflicts, it may be wise to name the same person as successor trustee, executor of the will, and attorney-in-fact of a Power of Attorney for Finances. When choosing such a person, the following are some factors which should be considered: trustworthiness, relationship with the trustor, his/her willingness to serve, his/her skills, and his/her residence. An adult child may be a good choice here especially when he/she is the sole beneficiary of the living trust. The successor trustee can be changed at any time before the original trustee (individual living trust), or both original trustees die or become incapacitated. As always, naming an alternate (2nd choice) is advisable here as well, as there is always the possibility that the 1st choice might not be able or willing to serve.
7. Three Wise People who are also trusted should be named here. When the time comes, they will be asked to decide if you, the original trustee (individual living trust), or both original trustees are incapacitated to a degree which require the successor trustee to step in. For obvious reasons, a successor trustee should not be named as one of these three people. The successor trustee will ask them to decide if it is the time for him to take over. If at least two of them will respond affirmatively and in writing, the successor trustee will take control over the trust property. In addition to the three people's names, descriptive or contact information is welcomed here, as it will facilitate successor trustee's attempt to locate them timely. Examples: John Brown, my brother; Helene Smith, my accountant, Irvine, California.
8. Living Trust's Property. A living trust is not valid without property. What property are you interested in transferring to the living trust? List that property here. It is wise to provide sufficient descriptive information for each property in order to help the surviving spouse or the successor trustee locate it. Also, because only property you own alone (separate property), or your interest in the property co-owned (e.g., 1/2) can be transferred to the living trust, and later distributed to your beneficiaries at your death, specify who owns the property. If owned by both spouses, it should be indicated so here. Examples: the house at 333 North St., Los Angeles, CA own by me and my wife; the bank account no: 555-6666, at Chase, Irvine, CA owned by me (husband) only; the books kept in the apartment located at 222 South St., Orange, CA, owned by both of us, husband and wife.
Very Important: the property listed here will have to be actually transferred to you as trustee(s) of the living trust. This means that for books, furniture, or other similar items to which it is likely you do not have title, a document called "Assignment of Property" has to be used. This document will be prepared for you and attached to the living trust document. After you receive and appropriately sign the living trust document, for items that have title (e.g., house, car, bank account), you'll have to obtain a new title indicating that you hold the property as trustee(s) of the living trust.
9. Transfer of Property: Who are the beneficiaries of living trust's property? Generally, the living trust is not valid, unless, at least one beneficiary is named (designated) here. When the trustor (individual living trust) or trustors (husband and wife) die, the trust property will be transferred to the beneficiaries listed here. As a general rule, the person making the living trust (the trustor) should seriously consider naming for each gift, a beneficiary and an alternate ( a second choice beneficiary). This is especially wise when the first beneficiary is a person (not an institution), as there is always the possibility that he/she would not survive the trustor. Also, in order to facilitate the identification of the beneficiaries when the times come, they should be listed by name, and if necessary, additional information should be provided. E.g., Mike Ross, my son.
A. Trustor's Designations. This option should be used to list the beneficiaries of the trustor of an individual trust, or, of one of the spouses, if the living trust is created by both spouses (husband and wife) together. The other spouse will do the same lower, at option B.
Beneficiaries. The beneficiary can be the successor trustee named earlier, or other person or persons, or an organization. Examples: all trust property to my son Mike Ross; all my interest in the trust property (if co-owned property will be transferred to the trust) to my son Mike Ross. In the text area provided the trustor may make a more complicated designation of beneficiaries by indicating each specific property item held in trust (listed earlier) and the name of the respective beneficiary. Examples: the bank account no: 555-6666, at Chase, Irvine, CA, to my son, Mike Ross; my interest in the house at 333 North St., Los Angeles, CA, to Mary Ross, my daughter, etc.
If the trustor names more than one beneficiary for a property item, generally he/she also indicates the share of each one (if he doesn't, the beneficiaries named will receive equal shares of that property). Example: 2/3 of my interest in the books kept in the apartment located at 222 South St., Orange, CA, to my nephew Mark, and 1/3 to my friend Carl Jones. The trustor may also indicate and alternate beneficiary to provide for the situation when the first choice beneficiary predeceases him, the trustor. Example: the bank account no: 555-6666, at Chase, Irvine, CA, to my son, Mike Ross (1st choice); alternate beneficiary (2nd choice): Mary Ross, my daughter.
Naming a minor (under 18 ), or a young adult (under 35) as beneficiaries, including alternates, is not a problem. You will have the opportunity lower to name someone to manage the property until they reach the respective age.
Residuary property is what remains after the specific property items are distributed to the beneficiaries named above. Sometimes, this could be the largest portion of trust's property. Most people would name someone as living trust's residuary beneficiary. This ensures that someone takes trust property for which a beneficiary was not designated, property received (e.g., thru a will), acquired, or earned by the trust after the living trust is made, or property left to someone who died before the trustor. The residuary beneficiary can be the successor trustee, or other person or persons, or an organization.
Naming a minor (under 18 ), or a young adult (under 35) as residuary beneficiaries, including alternates, is not a problem. You will have the opportunity lower to name someone to manage the property until they reach the respective age.
B. Spouse's Designations. "N/A, this is an individual trust" option should be selected if this is an individual living trust: a trust created by an unmarried person, or by a married person who chose earlier at #4 to create an individual (separate) trust. If this option is selected, go directly to #10.
Alternatively, if this living trust is created by a married person who chose to create a shared trust with his/her spouse, "Yes, as follows" option should be selected, and the spouse should list his/her beneficiaries following the same guiding information provided above at #9A.
10. Management of Property Left to a Minor or Young Adult : these provisions are optional but generally recommended if the trustor leaves valuable trust property to a minor (under 18) or young adult (age 35), and the trustor has an adult person in mind, who he/she would like to administer the property until the minor or the young adult reaches a certain age. Note: if the child or young adult has "special needs" because of mental or physical disabilities, you should consult an attorney, as a more complicated trust might need to be created.
UTMA (Uniform Transfers for Minor Act) was adopted in some states, and is generally preferred. Under UTMA, the management ends when the minor reaches the age the trustor indicates (up to age 25 in some states). The person in charge of managing the property left to a minor under UTMA, is called a custodian. You can name a different custodian for each minor. Most people would name their spouse as custodian. An alternate (2nd choice) custodian is recommended here as well, to account for the situation when the first choice is unable or unwilling to serve (just type in a second name, if you have one, and indicate that is a 2nd choice). Some possible options: the successor trustee named earlier, or the personal guardian of the minor named in your will. "Ends at Age" box should be used to provide the age of the minor (up to 25) at which the management should end and the property should be transferred to the minor.
The trustor may want to choose a Child Subtrust if he/she wishes to extend the period of management up to age 35, and/or the property left is considerable. Note: if the trustor chooses UTMA and his/her state did not adopted it, this generally means that the living trust provides for the creation of a child subtrust. The trustee of the child subtrust will be trustor's surviving spouse if the living trust was created together, as a married couple. If the trustor's spouse does not survive him/her, or if the living trust was created individually, the successor trustee named earlier, will be also the trustee of the child subtrust.
The box named "Name of Minor 1" is provided to write the name of the minor or young adult to whom the above selections apply. If property is left to more than one minor or young adult, the text area called "Other Minors" can be used to provide their names, how the property should be managed (UTMA or Trust), who should be the custodian, and at what age should the minor/young adult receive the property.
The spouse should also make his/her selections here, if this is a living trust created together by both spouses.
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