A living trust can be an essential piece of your estate plan. It allows you to communicate your wishes, plan for the management of your assets, and avoid probate with one document.
LegalZoom has helped more than 150,000 people create their living trusts and is a simple way to get your affairs in order.
Here is what you should know about creating a living trust.
What is a living trust?
A Living Trust is a legal document that states who you want to manage and distribute your property if you're unable to do so, and who receives it when you pass away. You set up a legal trust with just one document. The assets in the trust then pass according to the terms of the trust—not your last will. And therefore, if properly set up, assets do not go through probate. While a last will and a living trust both lay out how to transfer your assets after you pass, there are some key differences between them. A last will may be easier to set up, but it often needs to go through the court probate process after you're gone. A fully funded living trust should avoid probate, but transferring your assets into a trust can take more time and require additional paperwork. You should talk to an attorney to help you decide which is best. They'll help you make an informed decision after reviewing your estate size, family situation, state laws, and other factors.
In the trust document, you name a trustee. This is the person who manages the trust during your lifetime (if you can no longer do so yourself) and then distributes the assets to your trust beneficiaries after you are gone. You can be the trustee and name an alternate who steps in when needed.
You also name your beneficiaries and determine how and when they will receive the assets in the trust. For example, you might decide you don't want your children to get their inheritance when they are 30 or they have graduated from college. You can create almost any terms you want.
Benefits of a living trust
Living trusts are popular because they offer many benefits and few drawbacks:
- Assets that are legally owned (titled) in the trust do not go through probate.
- Trust assets typically can be distributed faster after death (whereas assets passing through a will must go through the probate process).
- You can use and spend the trust assets during your life.
- The trust can be changed or revoked at any time you choose.
- Since trusts can avoid probate court (a public proceeding), they are more private.
Important things to know about living trusts
There are a few things you need to keep in mind to ensure your living trust can offer you the most benefits:
- Once you sign the trust document, you must transfer the title of any asset you want into the trust's name. Bank accounts, real estate, investments, vehicles, etc. must be placed in the name of the trust to be included. This is called funding the trust.
- While a living trust allows you to keep most of your assets out of probate, it does not circumvent estate taxes. Understanding estate tax exemptions and how to make the most of them is important.
When should you create a living trust?
The perfect time to create a living trust is right now.
Many people don't think about estate planning until a major change in their families, such as marriage, divorce, or the birth of children or grandchildren. Although people think about estate planning when those milestones come along, they are busy. One way to ensure estate planning doesn't slip through the cracks when you don't have a lot of time is to create one from your home with LegalZoom.
Why choose LegalZoom for your living trust?
LegalZoom offers a simple online process for creating your own living trust that is affordable, completely legit, and trustworthy. It not only provides a smooth and convenient online process that can include attorney advice and review of your documents.
A LegalZoom living trust is state-specific and goes into effect once you sign it.
When you create your living trust with LegalZoom, you decide who will benefit from your trust and who will manage it. Your completed documents can be downloaded, or you can opt to have LegalZoom print them on archival paper and mail them to you.
Create a living trust as part of an estate-planning package
A living trust solves many of your estate-planning goals, but to fully protect yourself and your family, it's a good idea to create a complete package of estate-planning documents, including:
- Last will and testament: Although your living trust will own and distribute as many assets as you want, a will should also be in place to handle assets that were not transferred to the trust or overlooked. LegalZoom's living trust includes the option to add this Last Will (aka a pour-over will) at no extra charge.
- Living will: A living will (also called a healthcare directive) details your wishes about what type of medical care you do and do not want to receive if you cannot make your own decisions. You can make decisions in advance about ventilators, feeding tubes, life support, and more. If you cannot, you can also name someone to make medical decisions for you.
- Power of attorney: This document gives authority to the person of your choice to make financial decisions on your behalf if you cannot do so yourself.
A living trust combined with these three documents provides you with a comprehensive estate plan to help ensure you and your family are cared for in the future.
A LegalZoom living trust gives you control and flexibility over your assets and gives you peace of mind that your loved ones will be cared for when you are gone. Knowing you can control your assets yourself and depend on your trustee to distribute them exactly as you wish is a great benefit. LegalZoom's trusted process and access to skilled attorneys means you can count on them to help you carry out your wishes.