Frequently Asked Questions about Living Trusts
What is a living trust?
A living trust, also called an inter vivos trust, is a written declaration or agreement by which the signer creates a trust. A living trust is different than a testamentary trust which is created by the court, based on the decedent’s will, in a probate proceeding. The principal motivation for creating and funding a living trust is to allow the trust assets to be distributed upon death without the need for probate. (For an overview of probate, see answers to FAQ regarding probate.)
What are the basic provisions of a Living Trust?
- The creator of the trust is usually called a Settlor, Trustor or Grantor , or for a couple, Settlors, Trustors or Grantors, respectively.
- Typically the Settlor appoints him or herself as the inital Trustee, or manager, of the trust assets. Similarly, a married couple would appoint themselves Trustees.
- The trust should also name one or more Successor Trustees, to serve upon your death. The Successor Trustee also serves if you become incapacitated, or resign as trustee. Generally, the Successor Trustee serves without court involvement or oversight.
- Must trusts we prepare for husbands and wives provide that upon the death of one spouse, all trust assets pass to the surviving spouse. However, for some couples, a trust with "A/B" provisions , which require the creation of a "bypass trust" when one spouse dies, may be appropriate.
- Finally, the trust names the beneficiaries who inherit the trust assets upon your death. You should also name contingent beneficiaries in case your primary beneficiaries die before you.
Can I "Amend" or "Revoke" My Living Trust?
Yes. Unless your trust specifically states that it is "irrevocable", you always have the right to amend or revoke it, to add assets to the trust or remove assets from the trust, to add a Trustee or remove a Trustee.
Does the trust need to file a Separate Tax Return?
Not during your lifetime. Your social security number is also the trust's "tax identification number" (TIN). For a couple, the tax identification number is the social security number for one of the spouses.
If I execute a Living Trust, why do I need a Will?
When you sign a Living Trust, you should also sign a "pourover will" to be sure that assets soley in your name at your death will be administered as provided in your trust. For example, many clients decide not to re-title their cars in their names as Trustees. As long as the total value of assets which "pour over" into the trust does not exceed $150,00.00, no probate is required. (See answers to FAQ regarding Probate.)