How to Execute a Living Trust

By David Carnes

A living trust allows a person known as a trust grantor to place his assets under the administration of a trustee, who then distributes these assets to trust beneficiaries as instructed by the grantor in the trust deed. The main advantage of a living trust is that since it is prepared while the grantor is still alive, it allows the grantor's property to pass to his beneficiaries, both before and after his death, without the expense and delays of probate. The administration of a living trust involves challenges, responsibilities and potential legal liability.

Step 1

Prepare an affidavit of authority that includes the name of the trust, the date the trust deed is signed, and a statement identifying you as the trustee. Sign the affidavit in the presence of a notary public.

Step 2

Assemble the necessary documentation to establish your authority to third parties. This includes the affidavit of authority, the trust deed and the grantor's death certificate -- if the grantor was the original trustee and you have been named the successor trustee due to his death.

Protect your loved ones. Start My Estate Plan

Step 3

Identify trust assets. A list of trust assets should be included in an appendix to the trust deed.

Step 4

Locate and take custody of the title documents for all titled property listed as trust property. Titled property may include real estate, automobiles, stock certificates and bank accounts.

Step 5

Notify trust beneficiaries in writing of your trusteeship. Include a copy of the trust deed with your notification, and provide them with a general timetable for the distribution of trust assets.

Step 6

Obtain appraisals of all valuable trust property from licensed appraisers. Such property includes real estate, automobiles, securities such as company shares, and insurance policies. You may pay the appraisers out of trust assets. You need to know the true value of these assets in case you have to sell them to pay trust debts or distribute cash to beneficiaries.

Step 7

Pay all trust debts, even if you have to liquidate trust assets to do so. If you must sell property, you must rely on your affidavit of authority, the trust deed and the grantor's death certificate -- if applicable -- to complete the transaction. Trust debts may include taxes on income generated by trust assets, unpaid credit card balances and expenses for trust administration including your own compensation. You must file an annual federal income tax return for the trust if it is irrevocable and if trust assets earned more than $600 during the tax year. Keep accurate records of all transactions.

Step 8

Prepare periodic trust asset accounting reports detailing your disposition of trust assets, and distribute copies to each beneficiary. The frequency with which you must submit these reports depends on state law.

Step 9

Transfer trust property to beneficiaries as instructed in the trust deed, liquidating trust assets if necessary. Unless the trust deed provides otherwise, however, you may distribute either cash or assets directly to trust beneficiaries. You must use your affidavit of authority and associated documentation to transfer title to titled trust assets to beneficiaries.

Step 10

Close the trust after you have distributed all of its property. To close the trust, close all accounts listed in the name of the trust and issue a final trust asset accounting report to beneficiaries.

Protect your loved ones. Start My Estate Plan
Living Trusts & Bank Accounts


Related articles

Can You Transfer Debt Into a Living Trust?

A living trust is an agreement in which you transfer your assets into the ownership of the trust. You can retain control of those assets by naming yourself as trustee until your death, at which time a successor trustee takes over and distributes your assets to your beneficiaries. While you cannot transfer debt into a living trust, creditors might be able to reach the assets in the trust during your lifetime and after your death.

Removing Real Estate From a Revocable Trust

Revocable trusts are often implemented to avoid probate. A trust's maker, or grantor, retains the power to fully revoke or amend a revocable trust. A trust is governed by its terms and adding or removing real estate from a trust is a power that is usually specifically listed. If a trust lacks this provision, an amendment may be legally required before real estate can be added or removed. Trust requirements may vary, depending on state law.

How to Title Assets for a Trust

Transferring property from yourself to your revocable or irrevocable trust is known as funding the trust. Only assets that are properly titled to the trust can avoid probate at your death. Exactly which assets you should transfer, depends on your financial picture -- but how you title the assets is the same for various trusts.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Death of a Trustee & a Name Change on a Title

The death of a trustee under a living trust means the successor trustee, also named in the living trust, assumes the ...

Can a Trustee Be Removed for Not Giving a Accounting?

A trust involves the holding of property for the benefit of another. The relationship is legal in nature; the person ...

How to Sign Documents As a Successor Trustee of a Living Trust

A living trust is a common document in estate planning that provides for an orderly transfer of property without having ...

What Happens When a Revocable Trust Ceases?

Revocable trusts are often used as estate planning tools. Unlike wills, the administration of trusts after death can ...

Browse by category
Ready to Begin? GET STARTED