A living trust is an effective means to avoid Probate and transfer property at your death. A living trust is a legal document that controls the use and transfer of any property you have placed in trust. When you die, your named beneficiaries receive the property. If this sounds like a Will, you’re right; a living trust allows you to do the same basic things a Will does, with the huge added benefit of avoiding Probate. Probate proceedings are expensive and can take many months or even years before your property is eventually released to your heirs.

One big advantage of a living trust is that it is extremely flexible. You can transfer all of your property by living trust, or, if preferred, use a living trust to transfer only some assets, using other methods to transfer the remainder of your property (If you are interested in some cost-effective ways to transfer your home, automobiles or financial accounts without the need of either a WILL or a LIVING TRUST - and without the need for Probate - we would be glad to explain). Also, trusts normally are not made public at your death - unlike Wills, which become part of the public record during Probate proceedings.

Living trusts are called “living” because they’re created while you’re alive. They’re also called “revocable” because you can revoke or change them at any time, for any reason, before you die. As long as you are considered mentally competent, you still effectively own and control the property you’ve transferred to the living trust and can do what you want with the property, including sell it, encumber it, spend it or give it away.

Once the necessary paperwork has been drafted to establish a legally enforceable Probate-avoidance living trust, and after you have transferred your property to it, there is little difficulty in maintaining the trust. No separate tax records nor taxpayer ID number are needed, as all trust transactions are reported as part of your personal income tax return. Because you control the trust assets, all financial institutions will treat your living trust transactions exactly like they had treated you, personally, before you had transferred your property to trust.

A basic, Probate-avoidance living trust can also be combined with other types of trusts. For example, you can create a living trust that first avoids Probate and then continues for years after your death to control property left to someone with special needs, provide for your spouse and children from a previous marriage, or save on estate taxes (AB TRUST).

In simplest terms, a LIVING TRUST is a legal entity that holds things of value. You keep control over the trust property while you’re living, and at your death, it goes to the people you have named to inherit it. To create a LIVING TRUST, you must notarize a document that specifies the:

• Trustee - who has the authority to manage the trust property (you name yourself as the trustee of a LIVING TRUST);
  
• Successor Trustee - who turns the trust property over to the beneficiaries after your death;
  
• Trust Property - which are your assets that you have transferred into the trust;
  
• Beneficiaries - who receive the trust property at your death;
  
• Terms - which determine how the trust shall be governed, including your ability to amend or revoke it at any time.

For most people of moderate means - whose estates won’t have to pay federal estate taxes - the two goals of advanced estate planning are:

1. To control who will receive your property, and
2. To ensure that your beneficiaries will not have to go through the time and expense of Probate.
   

First, the LIVING TRUST document must be carefully drafted, naming yourself as trustee to manage the property while you are living, and a successor trustee to distribute the trust property at your death. You also name the trust beneficiaries who will receive the property when you die. You then must formally transfer property into the trust’s name. This will enable the successor trustee - after you die - to simply obtain the trust property from whoever holds it and transfer it to the named beneficiaries - without the need for Probate or other court proceeding.