Create a Living Trust in Delaware

A Delaware living trust can be an essential part of estate planning. A living trust allows you to place your assets in trust during life, continue to use and access them, and then direct how they are distributed after your death.

Living trusts in Delaware

A living trust in Delaware is created by the grantor, the person placing the assets in the trust. When you create a living trust in Delaware, you must select a trustee who will manage the assets in the trust. Most people name themselves as trustee and choose a successor trustee who steps in after their death. As trustee, you manage your assets as you normally would and the trust dictates that the assets are to be used for your benefit during your life, so you will live in your house and use your savings to pay your bills with no change. After your death, the assets that remain in the trust pass to your beneficiaries.

Because your assets are in the trust, they do not need to go through probate, as they would if you passed them with your will. Because of this, you bypass the probate court procedure and the fees involved. Delaware has not enacted the Uniform Probate Code and thus its probate process is more complex. Avoiding this can save many months. Delaware offers a simplified probate process for estates totaling less than $30,000, however most people who own a home do not qualify.

If you choose not to have a will or a trust, your assets are distributed by Delaware’s intestacy statutes, which give specific percentages to relatives.

The most common living trust in Delaware is a revocable living trust, meaning that you can make alterations to the trust during your life, or even cancel it completely at any time until your death. An irrevocable living trust is less common and becomes unchangeable once signed.

Delaware living trusts do not protect your assets from creditors. This is only possible if you create a Delaware asset protection trust, which does not give you control of your assets during your life.

Do I Need a Living Trust in Delaware?

Creating a living trust in Delaware can be an important part of your estate planning because of the control it offers. When you place your assets in a trust, you continue to control and manage them without interference during your life. You also maintain control over them after your death because the terms of the trust dictate how and when they are distributed to your beneficiaries. This differs from a will which distributes all of your assets once probate concludes. With a trust, you can carefully distribute assets for many years to come, choosing to give specific amounts on specific dates to your beneficiaries.

Delaware living trusts control your assets during your lifetime even if you become mentally incapacitated, meaning no guardianship proceedings are needed to maintain your lifestyle and manage your affairs.

Many people choose living trusts because they keep their private affairs out of the public eye. A trust does not go through a court proceeding to become effective and there is never a public record of the assets in the trust or to whom they go to. Wills are public record.

A trust is also much more difficult to contest than a will, providing extra security that your plan will stay in place.

Living trusts and estate taxes in Delaware

Most living trusts do not avoid estate taxes, however specially formulated trusts called QTIP, AB, or marital trusts do provide protection. Delaware offers a $5.34 million exemption in estate tax and federal estate tax has a similar $5 million exemption, meaning only estates in excess of these amounts pay a tax. Should this be your situation, a specialized trust of this type will transfer assets from you to your surviving spouse with no estate tax due. However, there is no protection from Medicaid spend down with a living trust.

How to create a living trust in Delaware

A living trust is created in Delaware by signing a Declaration of Trust, which will name the trustee, beneficiary and terms of the trust. You need to sign the declaration in the presence of a notary. Once that is complete, the trust must be funded by transferring assets into it. You can choose any assets you want to transfer but cannot transfer IRAs, 401(k)s or Keough plans.

Living trusts can be an essential way to protect privacy, manage assets, and provide an ongoing plan for family financial stability.

Delaware living trust FAQs

What is a living trust and how does it work in Delaware?

A living trust is a legal document that lets you put your assets into a special container called a trust while you're still alive. You act as the manager (called a trustee), so you keep full control of everything. When you die, your appointed trustee can distribute your assets according to your instructions. In Delaware, this is especially helpful because it lets your family skip the court process called probate, which can take months and add expense. A trust stays private too, unlike a will which becomes public record.

Why should I create a living trust instead of just having a will in Delaware?

Having a living trust means that your family won’t have to go through probate court after you pass, which can take months and cost thousands of dollars. A living trust also ensures privacy, while a will is public record. 

Additionally, should you become incapacitated due to illness or injury, a living trust ensures that your trustee is making any important decisions instead of having a court appoint somebody to manage your affairs. Plus, trusts are much harder than wills for unhappy family members to challenge in court.

What assets can I put into my Delaware living trust?

You can put most of your assets into your Delaware living trust, including your house, bank accounts, investment accounts, cars, jewelry, and business interests. Real estate, bank, and investment accounts need to be changed to show the trust as the new owner or account holder.  However, some assets, like retirement accounts should stay in your name, as moving them to a trust can trigger big tax penalties. Life insurance policies work better by naming the trust as the beneficiary rather than transferring ownership. The key is to make sure you actually transfer ownership of assets to the trust (called "funding" the trust), otherwise, those assets might still have to go through probate.

Can I change or cancel my living trust after I create it?

Yes, if you create a revocable living trust (which is the most common type), you can change or cancel it anytime while you're mentally capable. When you pass away, it becomes irrevocable, and your instructions must be followed. If you set up an irrevocable trust, you give up the right to make changes, which is why they're mainly used for special situations like protecting assets from creditors or reducing estate taxes. 

How much does it cost to create a living trust in Delaware?

Creating a living trust in Delaware can cost anywhere from a few hundred to several thousand dollars, depending on how you do it. Online services like LegalZoom offer basic trust packages that start around $399, while a premium package with attorney review costs about $549. If you hire a lawyer directly, expect to pay $1,500 to $3,000 or more for a complete trust package, especially if your situation is complicated. While this seems expensive upfront, remember that your family could save thousands in probate costs and court fees later. The money you spend now often pays for itself by avoiding the time, stress, and expenses of probate court after you're gone.

Do I still need a will if I have a living trust in Delaware?

Yes, you should still have a special type of will called a "pour-over will" even with a living trust. This will acts like a safety net to catch any assets you forgot to put into your trust or acquired right before you died. It also allows you to name guardians for minor children, which cannot be done with a trust. 

When should I get a lawyer's help instead of creating a trust myself?

You should consider hiring a lawyer if your situation is more complicated than average. This could include having an estate worth more than $5 million, owning property in multiple states, having a business, or wanting to provide for someone with special needs. You'll also want legal help if you have a blended family with children from previous marriages, want to protect assets from creditors, or need specialized trusts for Medicaid planning. While online services work well for straightforward situations, complex family dynamics or significant wealth require personalized legal advice. A lawyer can also help if you're unsure about tax implications or need trusts that provide asset protection beyond what a basic revocable trust offers.