Everyone has to come to terms with the fact that eventually their life will end. Everyone also has to be a responsible adult and make plans for that eventual moment. This is especially important for those who will leave behind a family, sizable assets or anything else of value like a business. One legal document that helps is a revocable living trust.
Here are ten tips for setting up a revocable living trust.
Ensure This is the Correct Trust for You
A revocable living trust is an estate planning tool. It is called living because the document becomes binding while the trust-maker is still alive. Additionally, the revocable trust allows for changes while the trust-maker is still alive. This is great for the person who is just beginning to dive into estate planning. In a way, it is a starter tool. Individuals who have sizable assets or own a business might require something different. The best way to find out is to consult with a professional.
List All Assets
When a revocable living trust is setup, it has to be funded. The funding occurs with the assets that are renamed to the trust. Eventually, these are the assets that are going to be handed over to the beneficiary when the trust-maker passes away. Most of the time, the main asset a person is trying to protect is their home. So, in many cases, real estate is the reason why this trust is chosen over others. The name on the title has to be changed to the name of the trust. Then, this action is made official when the change is filed with the recorder in the property’s county. Other assets that can be renamed to the trust are financial accounts, investments and notes payable as well as business interests and intellectual property.
As the assets are examined, the trust-maker must understand that not all of them can be entered into this trust-type. Retirement accounts, health savings accounts and motor vehicles, for example, cannot be renamed to the trust. Often this is due to state laws. While examining the assets, consulting with a professional is encouraged. A professional in this area helps clients determine if any borderline issues exist and how to address them. Plus, they offer additional guidance.
Gather Paperwork Pertaining to Assets
Estate planning is a task that requires a time investment. In addition to examining all assets and determining whether they can be renamed to the trust or not, all paperwork pertaining to those assets must be gathered, too. Ownership has to be proven before the assets are renamed. The worth of the trust will also be evaluated. So, it is necessary to figure out how much the investments are worth at that time. This is also true for the worth of financial accounts and business interests. If there is a decision to speak with a professional, time will be saved if the trust-maker has all the paperwork gathered for the meeting.
Pick the Beneficiaries
The point of setting up a trust is to designate who will receive the trust-maker’s assets when they pass away. When the trust is setup, the beneficiaries must be listed on the document. Often, direct family members are named as the beneficiary. If the trust-maker has a wife and children, the wife is usually designated the beneficiary along with the children so that they are taken care of financially. In other cases, someone with no spouse or children may designate a charity or organization the beneficiary of the estate. A revocable living trust keeps the trust-maker in control of their assets. In addition to being revocable as long as he is still alive, it ensures that there will be no legal battles when they pass.
Pick a Successor Trustee
Living trusts are setup to protect the trust-maker and their assets. Since the population is living longer, there are more opportunities for health deterioration. In case the trust-maker’s capacity to make decisions for themselves diminishes, the trust serves as the guide for the distribution of the assets. Plus, the trustee executes the plan. The distribution of the assets of a wealthy person can get heated and difficult. This had led to epic battles, which is easily prevented with this document. If the trust-maker’s capacity to make decisions does become compromised, everything is already mapped out so fights and legal battles can be avoided. It also removes the possibility of delays in the distribution of the assets.
Speak with a Legal Professional
Once the groundwork has been completed, a professional like a San Diego living trust attourney is available to offer their services. They can look over the details and determine if any gaps that need to be filled exist. Legal professionals in this sector are well-versed in laws that impact trusts. If any of those laws have been amended, changed or removed, a professional can make their clients aware and offer relevant advice.
Create a Trust Document
Once all the elements of a revocable living trust have been gathered, it is time to assemble the trust document. Doing all the groundwork beforehand makes this part easier. In order for the document to be legitimate, it does have to follow the correct guidelines. So, a professional in this area comes in handy. There are several resources available online and at the local library to read over. When the final draft is ready, though, it does not hurt to have someone who has an expertise in this field proof the document.
Transfer the Title of Your Home
To begin making the revocable living trust official, the actual transfers and renaming of assets has to occur. For many people who setup a trust, their home is their biggest and most important asset. Whether the trust is put together to keep a home in the family or because the trust is going to protect the family who is left behind, the title has to be transferred. As soon as the clerk’s office files the change, the trust becomes more legitimate.
Sign the Trust
The final step and tip for creating a revocable living trust is to sign the document. In other to prevent fraud, the document must be signed by the trust-maker in the presence of a licensed notary public. The document must include the information of the real estate property being used to fund the trust. It must also name the trustee and the beneficiary.
Estate planning is an important step in the retirement planning process. Setting up a revocable trust grants your family, business partners and yourself the peace of mind you all deserve.