Create a Living Trust in Washington, D.C.
Create a Living Trust in Washington, D.C.
A Washington, D.C. living trust holds your assets in trust during your life, but you continue to use and control them. After you die, the trust assets are distributed to your chosen beneficiaries. A revocable living trust (also called an inter vivos trust) offers a variety of estate planning benefits.
Living Trusts in Washington, D.C.
A living trust in Washington, D.C. is set up when the grantor places assets in the trust. As the grantor, you choose what assets you would like to transfer, but your trust will be most effective when you place as many assets as possible into its ownership. There are some accounts that cannot be transferred to a trust, such as retirement accounts and life insurance. Your trust needs a trustee who is responsible for managing the trust assets for your benefit during your life. Any adult can be a trustee, but most people simply name themselves trustee to obtain the most control. You will need a successor trustee who can take over the trust management after your death. The successor also has the responsibility of distributing the trust assets to your beneficiaries in accordance with the terms you establish in the trust. A revocable trust is flexible—you can change it or eliminate it at any time while you are alive. An irrevocable living trust cannot be changed at all.
One of the most popular reasons to choose a living trust Washington, D.C. is because assets in the trust do not pass through probate upon your death. They can be immediately distributed to your beneficiaries if you wish. A will must go through probate, a court process that examines and approves a will before it can be put into effect. Assets in a will cannot be transferred until probate concludes. Probate may take months and involves the expenses of an attorney, executor, and court fees. The District of Columbia does not use the Uniform Probate Code, so its procedures are not streamlined. Your trust allows you to avoid probate in other states where you own property, as long as you transfer those assets into the trust.
If you believe your estate will be worth $40,000 or less upon your death, it qualifies for a small estate proceeding in Washington, D.C. This process is faster and less costly than regular probate and is also less expensive than setting up a trust.
Do I Need a Living Trust in Washington, D.C.?
Creating a living trust in Washington, D.C. allows you to make careful plans for your future. The trust can offer you personal protections as well. Your revocable living trust protects you should you become mentally incapacitated. All of your assets are already controlled, owned, and managed by the trust and a conservatorship proceeding is likely unnecessary. While a durable power of attorney can be rejected, a trust cannot be. Your financial life is protected by the trust.
Living trusts offer a curtain of privacy for your affairs that is not available with other estate planning options. If you use a will, that will becomes public record when it is probated. A trust, in contrast, does not become public and the names of your beneficiaries, your assets, and the terms of your trust remain private. The trust is also much more difficult to contest than a will, providing certainty that your wishes will be carried out.
Another benefit of a living trust is the control it offers while you are alive and also after you die. During your lifetime your assets are technically owned by the trust, but since you control the trust, you have control of the assets. Your daily life remains the same. After you die you still maintain control over your assets because they are controlled by your trust. You can specify exactly when the assets should be distributed to your beneficiaries. Some people choose specific beneficiary birthdays to ensure the heirs will be mature enough. A will does not provide this option and passes assets once probate is finished.
Living Trusts and Estate Taxes in Washington, D.C.
A living trust does not help you avoid estate taxes. Washington, D.C. applies estate tax to estates worth more than $1 million, but in 2016 this will go up to $2 million. Federal estate tax applies to estate valued at over $5 million. You can form a special kind of trust called a marital trust (sometimes referred to as a QTIP or AB trust) that avoids estate tax by passing assets directly from the deceased to a surviving spouse. Living trusts do not shield assets from Medicaid or creditors.
How to Create a Living Trust in Washington, D.C.
If you would like to create a living trust in Washington, D.C., sign your written trust document before a notary public. To put the trust into effect, you must transfer ownership of your asset into it. A living trust offers control and flexibility that may suit your needs. Establishing a trust may offer you peace of mind.
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