living trust is a good way to “avoid probate” after you die.
Here are the basic things you should know about a revocable living trust:
You control your assets during your lifetime.
With a living trust, your assets—your home, bank accounts, stocks,
etc.—are put into the trust, used for your benefit during your lifetime,
and then transferred to your named beneficiaries when you die. Most people
name themselves as the trustee in charge of those assets. And “revocable”
means you can amend or revoke the trust at any time.
You choose your successor trustee. While you will
normally be the trustee while you are alive and capable, you name the
person you trust to succeed you in case you become incapacitated and cannot
manage the assets, and the person who will take over when you die. The
terms of the trust will specify how those assets are to be managed if
you are incapacitated, and how they are to be distributed at death.
You must transfer your assets into the trust.
Once the trust is set up, you must transfer your assets into it. Deeds
to your real estate must be prepared and recorded; bank and investment
accounts must be put into the name of your trust.
You still need a will. A
living trust is part of a complete estate plan that includes a will. If,
as sometimes happens, you have assets at your death that are not in the
trust’s name, a will provides that those assets are transferred
to the trust upon your death, and are then distributed according to the
terms of the trust.
You avoid probate court.
At your death, assets held in your trust are managed by your chosen successor
trustee and distributed to your beneficiaries without court supervision
or involvement. This not only saves your heirs both time and money, but
your assets, their value, and the identity of your beneficiaries can remain
private. If your assets are not in a living trust when you die, they must
go through probate: a court-supervised process for transferring your assets
to your beneficiaries (if you have a will) or legal heirs (if you don’t).