Beneficiaries of a Living Trust

Beneficiaries of a Living Trust

There are three types of living trust beneficiaries:

  • Specific beneficiaries, who receive specific property
  • Primary beneficiaries, who receive any property not distributed to specific beneficiaries
  • Alternate beneficiaries, who receive property if the primary beneficiary dies before the creator of the living trust

In general, you can choose any person or entity you want to be your beneficiary. In a community property state, you are not required to leave anything to your spouse.

Distributing Property to Your Spouse in Living Trusts

In community property states, your spouse may be able to invalidate part of your trust if you leave him or her with less than a certain amount of your property (usually between one-third and one-half). If a court finds that your spouse has a valid claim, your trust won't be completely invalidated. Instead, the court will modify your trust to accommodate this claim. It is relatively easy to avoid these problems if you designate your beneficiaries carefully.

Distributing Property to Children in Living Trusts

You can leave property to children through a living trust. You can keep your property in trust and designate an adult to manage that property on your child's behalf. This is called a children's subtrust. The subtrust will end when your specified conditions are met (e.g., when your child turns 21). If you want to exclude a child from your trust, you need to say so explicitly. If it seems like you left out one of your children by mistake, a court may modify your trust for that child's benefit.

Designating a Guardian

You can't nominate a guardian for your minor children in a living trust. You should make this designation in a last will and testament. This can be a pour-over will, as discussed in Section 3.

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  • Definition of a Living Trust
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  • Comparing Living Trusts and Last Wills
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  • Probate, and Reasons to Avoid It
    Probate is a court-supervised process used to validate your will and distribute your property. The process takes anywhere from six months to over two years to complete, and may require that lawyers or other professionals be hired. Even if you die without a will, if your estate's value exceeds a...
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  • Transferring Property into a Living Trust
    You must transfer property into a living trust to take advantage of the trust's benefits. The person who transfers property into a trust is called the "grantor." In general, you should put your most valuable property in the trust. This may include your:
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  • Real Estate Placed in a Living Trust
    If you are the sole owner of a piece of property, you can include that property in your living trust. You will need to change the property's title to reflect the ownership change.
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