Living trust forms are documents that allow you to place your assets to the benefit of another person upon your incapacitation or death. This differs from a will because a living trust doesn’t go through a probate process.
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Living Trust Forms
Types of living trust forms
You use living trust forms to prepare your assets and estate. This is a trust that you have established during your lifetime in which you place your properties and assets within the trust for estate and asset planning.
Then you would assign a person to manage assets for your beneficiaries, while you’re still alive. There are two main types of living trusts:
- Irrevocable
You cannot change this trust and is acts as a separate entity. It places a property that you have listed in your trust as its own property – no longer yours. A typical irrevocable living trust form has its own TIN that you may apply for with the IRS. - Revocable
This is the more popular of the two for the main reason that you can change the contents of the revocable living trust form at any given time. Assets listed in the Trust are still considered yours.
Can I set up a living trust myself?
Yes, you can create a do it yourself living trust without involving any lawyers in any part of the process. One of the main requirements is to name a trustee who you will charge with the management of your assets then distributing them.
Generally, you will name yourself as the primary trustee. But it’s also recommended to name a successor or alternate trustee so that you have a backup. If you opt for a trust company or a bank to be your trustee, you can do so.
After the trustee, you have to choose the beneficiaries in your living trust forms. These are the ones who will receive the property or assets in your trust. In most cases, this is one of your family members.
Revocable Living Trust Forms
What documents are needed for a living trust?
A legal trust is a relationship wherein one person owns a property for another’s benefit. There are many cases where you can establish a trust with just a living trust template. Still, there are other documents that you can use with living trust forms:
- Trust Agreement
This document creates a trust that defines your relationship’s parameters. The agreement gives instructions on how the trustee must manage and distribute assets and when you can revoke or amend the trust. - Trust Declaration
This document creates a trust indirectly or directly. This document simply states that the property to which you hold title is another person’s property “held in trust.” - Power of Attorney
This document creates a relationship between you and your trustee allowing the latter to do specific tasks or access certain accounts that you own. The document makes it easier for your trustee to deal with legal matters.
What are the disadvantages of a living trust?
Living trust forms have their own complications and disadvantages although most people agree that the benefits outweigh these. Therefore, before making a living trust sample, you should know them. Here are the disadvantages of a living trust template:
- Paperwork
Although creating a living trust is both inexpensive and easy, it does require a lot of paperwork. You have to create then print out the document which you then sign in the presence of a notary public. - Record-Keeping
After creating a revocable living trust, you need to keep day-to-day records. If you are both the trustee and the grantor, then you don’t need to separate income tax returns or records.
Additionally, you have to maintain written records each time there is a transfer of property to and from your trust. This becomes more challenging when you need to transfer a lot or properties in and out of your trust. - Tax Transfers
In most states, the transfer of real estate to a revocable living trust isn’t included from transfer taxes which are typically imposed on transfers of real estate. However, in a couple of states, a real estate transfer to a living trust might result in a tax. - Challenge of Refinancing a Trust Property
Sometimes, title companies and banks might hesitate if you request them to refinance your property because the legal title to real estate in a trust is in the name of your trustee. However, you can reassure them sufficiently if you show them a copy of the trust document that specifically gives you as the trustee, the right to borrow against the property. - No Cut-off for Creditor’s Claims
Many don’t really worry that after dying, creditors will keep trying to collect debts from any property in their estate. In most cases, the surviving relatives pay all valid debts like taxes, illness expenses, funeral expenses, and outstanding bills.
Living Trust Templates
Tips for creating your own living trust
More often than not, lawyers would charge a hefty fee to help you create a living trust document. Surprisingly, creating a do it yourself living trust isn’t that difficult. When drafting a standard living trust – which is the same document that lawyers offer to create – always use legal language. From there, you can add the following relevant information:
- The name of the person creating the trust. This is the settlor, trustor or grantor. If you’re creating a living trust for yourself, this will be your name.
- The name of the person you have assigned as your trustee. The one who manages your trust. You may choose to appoint yourself as the trustee too.
- The name of the person who will take over as the trustee then distribute your property if you die or become incapacitated. Most people opt for a family member like a close friend, a spouse or an adult child.
- The names of the people who will receive your properties in the trust. These are your beneficiaries.
- The name of the person who will manage any property that goes to minor beneficiaries.
Finally, to make your trust document effective, you have to transfer into the name of your trustee all of the properties to get distributed under its terms. For the transfer, you may use some form of standard transfer document like a deed.
