Do-It-Yourself Living Trust

By Bryan Driscoll, J.D.

Do-It-Yourself Living Trust

By Bryan Driscoll, J.D.

A living trust is one component to a complete estate plan that provides you with more control over who receives your assets and how they are distributed. While it's always recommended that you speak with a skilled estate planning attorney, here are some important things to consider when seeking to set up a living trust on your own.

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Estate Planning Basics

A living trust is an estate planning document which gives you control over your assets during your lifetime. It also provides you greater control over how your assets are distributed to your beneficiaries, or heirs. This is a major advantage over a last will and testament.

When you pass away, your will enters probate. This is a legal process where a court determines how to pay your debts and distribute your assets. A will provides you with some control over this process, but a living trust provides you even more control. In fact, having this document may allow your estate to avoid probate altogether. This is a substantial cost-saving and time-saving technique to make sure your beneficiaries receive your assets as soon as possible after you pass away.

Parties to a Living Trust

To create a living trust, you must have a trustee to manage it and at least one beneficiary to inherit its asset(s). You must also fund the trust, or place at least one asset in its name.

The trustee can be you during your lifetime. Appointing yourself allows you continued control over all the assets you place into the trust. Make sure you appoint a successor trustee to take over management and handle the distribution of assets after you pass away.

While you must have at least one beneficiary, you can appoint multiple. This is where detail is key. If you want your trustee to distribute certain assets to a specific beneficiary, you must make note of this in the trust document. Any ambiguity could mean your document ends up in court to determine distribution.

Trust Assets

Your trust must contain assets. To do this, the assets must be titled in the trust's name. Many people have trouble giving up control of their assets. However, if you are the first trustee, then you still keep control over all of your assets as though everything was titled in your individual name.

This is an important step because all assets in your living trust avoid probate and can be distributed to your beneficiaries immediately. Any asset not titled in the trust's name must pass through probate, as mentioned above. Not only does this mean a delay in your beneficiaries receiving these assets, but it also means additional costs for your estate that can cut into the distribution to your beneficiaries.

Another beneficial feature of a living trust is that you can set specific conditions for the distribution of assets. You have the option to give your beneficiaries everything at once or provide for gradual distribution over time, as well as the option to designate an event or date other than your passing to trigger the distribution. For example, if you have a young niece you want to leave a substantial sum of money to, you can direct the trust to distribute this sum of money over many years or in a lump sum after she graduates college, rather than simply distributing the entire sum to her when you pass away.

A living trust is a great way to help protect your assets and provide more control over the distribution of those assets after you pass away. Following this guide along with your state's laws to ensure your document is set up correctly according to your wishes.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.